What to do if you've been rejected for credit
What Do I Do If I've Been Rejected for Credit?
Being refused credit is never a good feeling, which can be aggravated when you’re not sure why you’ve been rejected in the first place. If the whole process had left you feeling confused and disheartened, we’re here to help you.
We’ve put together this guide to help you understand why you’ve been rejected for credit and your next steps to get you back on the right path to a brighter financial future.
Why was my credit application denied?
Your application for credit can be rejected for a number of reasons. In most cases, credit rejections are attributed to a poor credit rating. Other reasons can also include: maxing out your credit limit, not repaying your previous financial obligations in full or even having no credit history at all.
As a result of these factors, lenders may reject your application.
Does being refused a loan affect your credit rating?
Being rejected for credit itself doesn't impact your credit score; however, a hard credit check, which most lenders perform when assessing your application for credit will. Which is why it is essential to ensure that you are likely to be approved for credit before you apply.
How long does a declined application stay on your report?
After you have applied for a loan, loan and credit card applications will stay on your report for up to two years before they are removed by a credit reference agency. The impact applications have on your credit report is minor; however, many hard search enquiries and rejections may deter some lenders from approving your request.
Why can't I get credit with a good credit score?
Having good credit doesn't necessarily mean you'll be approved for credit. Instead, lenders must ensure that you can also afford to borrow the money and repay the loan and its interest in full. If your income is unreliable or you suddenly have a high-debt to income ratio, your application for credit may still be rejected.
What should I do next?
There are many things you can do next if you've been refused a loan, firstly it's helpful to identify why you have been rejected for credit. If you've got a 'thin file' credit report (no credit history) or a bad credit file, then you may wish to take steps to build or improve your credit.
If you are struggling financially with debt, then contact Money Advice Service for more information. It may also be worth considering talking to a debt counsellor or debt management company.
What are my options for borrowing?
After applying for a credit card or a loan and being rejected, we understand that your need for credit doesn't disappear along with your application. Instead, it can be quite the opposite, so what can you do? There are several different forms of credit available to borrowers who have been rejected that include:
- Secured loans: provide additional security to your loan application by offering an asset to secure your loan against.
- Credit unions: preferring to help people over profit, credit unions can have more lenient criteria for you to meet, making it easier to be approved.
- Open banking: if you have no credit history or adverse credit, open banking is a secure way for you to provide financial institutions access to your information, helping you to demonstrate your financial stability.
At Fablious, we offer open banking as a way to match our customers with alternative finance products that suit their needs without credit checks, instead we view your finances in real-time using our open banking API to match you with the financial solutions you both require and are eligible for.
For better finance solutions tailored towards you, why not sign up for our open banking today!
Frequently Asked Questions Frequently Asked Questions
What happens if you are refused credit?
If you have been refused credit, think carefully before you apply for more. Credit applications, successful or not, will leave an entry that you will be able to see when you check your credit report. Many applications in a short space of time will have a negative impact on your credit history.
How do I get approved for credit?
Getting approved for credit is tricker than you think. In order for you to be accepted, you will need to meet a lenders eligibility criteria, dependent on age, income and affordability. If a lender believes that you are unsuitable to borrow credit due to lack of creditworthiness or affordability, your application may be rejected.
Therefore you will need to be able to provide the following to be approved for a loan;
- A reasonable credit history: demonstrating your ability to repay personal loans and credit cards responsibly
- Affordability: that you can afford to make repayments on the amount you wish to borrow, including interest rates and fees
- Steady and regular income: showing that your circumstances and affordability are unlikely to change
Why Choose Fablious?
Fablious is an Alternative Finance Community, meaning that we compare all manner of products aimed to benefit our customers that differ from traditional forms of lending. If you've been refused credit cards, mortgages and loans, then we can help.