Before we chat about what you need to do if you are constantly rejected for loans or credit cards, it is essential that you stop applying until we figure out why. By applying for too many forms of credit in a short space of time, you could be damaging your credit score. In this post, we will be detailing some steps you should take and offering some alternatives to consider, which should help you to understand your financial position and make a decision on your next move. And you should know what is the usda.
Why Have I Been Refused Credit?
There are several reasons why a provider may have turned down your application, including:
- Your credit score is too low
- There is negative information on your credit file
- The lender believes you wouldn’t be able to afford to repay
- The information on your file suggests fraudulent activity
- There are questions around your identity or address
Most of the time, you can find out what the issue is yourself by checking your credit file. You can do this for free using Experian, Equifax, or TransUnion, which won’t damage your credit score. Once you are able to see your rating, you may be given suggestions on areas for improvement, and you can look through your details to make sure they are up to date.
Poor Credit Borrowing Options–
If you find that the reason your applications are declined is because of poor credit, there are a few alternatives you can consider.
Bad credit loans –
there are many lenders online offering poor credit options, such as payday loans for bad credit. These types of loans are offered based on your affordability, rather than your credit rating, so if you can sustainably afford the repayments, you may be accepted.
Credit unions –
you need to become a credit union member before you apply to borrow with them. These unions are committed to helping people in need, so their interest rates are capped at 12%, but many are significantly lower, so could help those with low credit.
Personal borrowing –
this should never be your first option as it can damage your relationships, but as a last resort, if you have trusted friends or family members who are willing to help, you could borrow money from them. Make sure you draw up an official contract and discuss interest rates to make sure everything feels legitimate.
Rebuild Your Credit Rating–
If you would rather make improvements to your credit rating before applying to any providers, there are a few steps that you can take:
- Register on the electoral roll via gov.uk
- Check for mistakes on your file and correct them
- Check if you are linked to another person
- Try to pay off existing debt
- Pay your bills on time
- Avoid submitting too many credit applications at once
- Avoid moving home or changing jobs too often
- Keep your credit utilisation low
If you need any further help with understanding your credit rating or the reasons why your credit applications may have been declined, please seek impartial help from the Money Advice Service.