Credit refusal interactive guide
Have you been refused credit?
Not sure why, or what you can do next?
Our step-by-step guide will help you.
It’s important to find out why you were refused before you apply again. Making multiple credit applications can lower your credit score and your chances of approval.
How do lenders decide who to lend to?
Lenders can learn about your credit history by looking at your credit report and application form. They may also use any information they already hold on you (for example, if you’re an existing customer).
It’s always the lender that decides to approve or refuse your application. Credit reference agencies like us can’t decide, and we’re not told when you’re refused or why. However, we may be able to help you work out why.
Why have I been turned down for credit?
Here are some common reasons why people get turned down for credit:
- A lender’s specific requirements. It’s worth noting that lenders make the decision, not credit reference agencies like Experian. Every lender or credit provider has a different set of requirements and criteria – there’s no universal ‘pass mark’ for credit scoring, so you should ask the lender why you were refused.
- The lender couldn’t confirm your identity and address. This sometimes happens if you haven’t registered on the electoral roll, or if you’ve changed your name or address recently and didn’t make the lender aware
- Your credit history isn’t substantial enough. Lenders like to see evidence that you’ve successfully repaid credit before. If you haven’t used credit before, or if you’re new to the country, there might not be enough data for lenders to approve you
- You have late or missed payments, defaults, or county court judgments in your credit history. These may indicate you’ve had trouble repaying debt in the past
- You have an Individual Voluntary Agreement or Debt Management Plan. This might suggest that you can’t afford any more debt at the moment
- You’ve made multiple credit applications in a short space of time. Lenders may see this as a red flag, as it could suggest you’re in financial trouble
- There was a mistake on your application form. For example, if you live in a flat, your address may need to be written - “Flat A, 125 High Street” and not “125A High Street”
- You’re financially associated with someone who has a bad credit history. Learn more about financial associates here
- You aren’t their target customer. For example, some lenders only want to lend to those with high or low incomes
- Your employment history. Your recent employment and salary information can be a good indicator of stability, which is an important consideration for lenders – but this isn’t recorded on your credit report.
- Information that isn’t on your credit report. It’s equally worth knowing what information is not included on your credit report. Your credit score isn’t influenced by missed child support payments, rental payments, parking fines or the levels of interest you are paying on existing borrowing – so your credit report doesn’t record these. If you wish to add your rental data to your Experian credit report you can find out how here.
The best way to find out why you’ve been refused credit is to ask the lender for a reason. However, it also helps to get a copy of your Experian Credit Report – check it for accuracy and anything listed above.
How can I increase my chances of being accepted for credit?
To get the credit deals you want, you need to understand what lenders look for and improve your credit history accordingly. Here are our top tips to get you started:
- Try to minimise the number of credit applications you make. Aim for a maximum of one every three months
- Get on the electoral roll by registering to vote. This can help lenders confirm your identity
- Ensure your credit information is up-to-date and accurate by getting a copy of your Experian Credit Report. If you want to check your report regularly for any changes, you might like to get a CreditExpert paid subscription
- Check your credit score regularly to keep track of your progress. You can access your Experian Credit Score with a free Experian account, and it updates every 30 days if you log in
- Consider building up your credit history with smaller forms of credit. By paying off credit on time and in full, you can show lenders you’re a responsible borrower. Remember, you should only take out credit you can comfortably afford
- Compare mortgages, loans and credit cards to find a deal that fits you. You can use our comparison service to search credit from across the UK market
Learn more about improving your credit score here.
*‘Most trusted’ based on 61% of 1057 respondents. ICM Unlimited survey June 2017.