Find out why the Service decline your applications for credit cards, loans, mortgages and what to do next. Discover what you need to know about ‘bad credit’ loans.
Why do lenders decline credit applications?
You might be declined because the lender has decided you don’t meet its affordability criteria, which means they think you’ll struggle to repay what you’ve asked to borrow. This can happen when you submit details of your income and outgoings as part of a mortgage or loan application and the lender decides you won’t have enough left over each month to make the payments.
Your credit score can also influence a lender’s decision to decline your application. A bad credit score could be the result of one or more issues, such as
• Not repaying previous loans on time, or missing payments
• Paying utility bills late
• Not appearing on the electoral roll
• Your partner’s credit history, if making a joint application
• Regularly borrowing up to your limit on one or more credit cards
Another potential problem is having a limited credit history. Lenders look at how you’ve used financial services in the past to work out whether lending to you is risky. If you haven’t used a current account to make payments by debit card or by Direct Debit or had a mobile phone contract, for example, there’s no evidence that you’re a responsible borrower.
What to do when you’ve been declined for credit
Firstly, don’t apply to another lender until you’ve checked your credit report. Multiple applications will be recorded on your report and can make lenders think you have money problems. If your application is then turned down, this could affect your credit score.
Your next step is to ask the UK’s three main credit reference agencies to show you the details they store about you, and to correct anything that’s wrong. Even minor spelling mistakes in your details can cause problems. Each agency works out your score differently, so check all three.
