Getting turned down for credit can be frustrating. But, there are steps you can take to understand why you were refused. There are many things you should avoid doing that can make it even more difficult for you to obtain credit. Let’s take a look at the alternative borrowing options to consider or completely avoid.
What they should have told you when you were refused credit
If you have been turned down for a credit card or loan, the provider you applied with should tell you were turned down due to the search on your credit file. They should also tell you which credit reference agency they used . You can query why you were refused, however, they are not obliged to give you a detailed reply.
Around 79% of credit reports contain mistakes, so make sure you check there are none on yours. If you spot any mistakes, write to the credit reference agency and have them correct it immediately. You must give an explanation as to what information is wrong, including any evidence you have. The agency then has 28 days to act. The incorrect information will be marked as disputed until they have finished investigating it.
Even if you can’t understand why you have been refused, the worse thing you can do is carry on applying for more credit. All applications, successful or not, show up on your credit file.
By making several applications at once, you appear to the lenders as desperate for money. This can damage your credit rating even further. Always remember, your credit rating not only affects your ability to borrow, but also the rate of interest you may be charged. [LINK]
What should I do next?
Your next step depends solely on what you want the money for.
If you can definitely afford the repayments
If you are looking to borrow to fund a purchase such as a car, and you can afford the repayments of the loan, then check your credit rating. To do this, subscribe to a full credit report service, or pay for a one off print off of your file.
What if my credit report is not looking too good?
If you have been rejected for a loan or credit card it could be the perfect time to think about your money situation.
If you have debts that you’re struggling to pay, borrowing your way out of them is not the answer. You should talk to a debt advisor about your money worries ASAP.
For tips on building your credit rating check here.
You may also want to consider Creditbuilder™ which could help to improve your credit score.