Top 10 Credit Myths
Credit of any sort, from mortgages to credit cards, has never been handed out freely. You have a better chance of getting the deals you want if your credit report shows lenders that you are in control of your finances and are likely to make any agreed repayments on time and in full.
The lender always decides whether to accept or refuse your application. If you’ve been turned down, only the lender can tell you why because only they know. If you ask, they should be able to give you the main reason. This is useful because it might identify action you can take to address the situation, such as registering on the electoral roll, checking your credit report or asking the lender to reconsider their decision, especially if you can provide additional evidence to support your application.
The lender may have said no because they don't think you’re in a position to take on further credit. If you are struggling to make existing repayments, talk to your lender as they could help you to work out a schedule of repayments you can afford or arrange a temporary payment holiday. You can also get help from providers of free debt advice, such as the Citizens Advice Bureau, StepChange Debt Charity, the Money Advice Service, National Debtline and Payplan.
Your credit report includes any credit accounts you have had in the last six years and how you have managed them. Adverse information on your credit report - such as late repayments, defaults or court judgments, may suggest to a lender that you are unlikely to repay future credit on time.
If you’ve been refused credit because of the information on your credit report, you should check your credit report carefully and take the necessary steps to improve it or your financial situation generally.
Fill out your application form carefully, and don’t just guess at answers such as how long you’ve lived in a property. Supplying false information may lead to delays or cause the lender to refuse your application. It may even be viewed as fraud.
If you have made a mistake on your application form, ask the lender if they will allow you to correct it and resubmit your application.
Plan your credit applications carefully and try to spread them out where you can. Each time you apply for credit, the lender is likely to check your credit report and leave a credit application search, otherwise known as a footprint. Although being refused credit isn’t registered on these footprints, simply making several credit applications close together can worry lenders as this can be a sign of financial difficulties or even fraud. So target your applications carefully and always investigate any credit refusal before applying elsewhere.
Other types of search footprint, such as those left by identity checks or quotations, are not used by lenders to help calculate your credit score.
Lenders have different lending policies and sometimes target particular types of customers - those with high or low incomes, for instance. Lenders should be able to tell you if this is the reason they’ve refused your application, so ask them. It’s certainly worthwhile checking any guidance the lender provides before you apply, to help avoid wasted applications.
Checking your credit report online before you apply for credit can help you spot any potential issues in advance, allowing you to take the necessary action to get them resolved.
Top tips to improve your chances of getting credit when you want it:
If you are finding it difficult to get credit, you may find it easier to apply to a lender you have an existing relationship with, such as your bank.
One of the best ways to stay in control of your finances is to check your Experian Credit Report with Experian CreditExpert*.
Experian CreditExpert provides more than just your credit report, including: