Being refused credit when you’re short on cash can be quite offensive. Especially, with the current economic climate, when even the cheap credit deals among other types of credit is much harder to obtain. This really has a number of consumers feeling the financial squeeze. Most often having few credit opportunities available but your application has been rejected. Consumers have a right to ask the lender their reason for denying you credit. Here are a few things to consider when evaluating why you’re being refused credit.

Reviewing your credit Score

When you apply for a loan and the application was rejected it’s a good idea to review your credit history and score. You can receive a copy of your credit score by contacting the credit reporting agencies. There are three main credit reporting agencies in the UK such as Experian, Equifax and Call Credit. These agencies will provide you with a copy of your credit report. A small fee may apply to obtain this information however in the case of being refused credit it is a very valuable procedure to consider that is worth it in the end.

Why your credit history is important

For the most part making sure your credit history doesn’t have errors or inaccurate information is the first reason you want to check your credit score and history. Since all lenders are most interested in your stability and ability to make your payments timely, ensure there are no errors reported on your credit history is essential. This also includes correcting incorrect address that you have not resided at however appear on your credit history. This information can be removed or corrected by contacting the credit reporting agencies and filing a dispute.
 

Additionally your stability is an important component of your credit history most lenders are going to consider. What their looking for is a long term history, therefore someone who is self-employed, a tenant or young will have a lower score more than likely. As far has your credit history is concern in terms of outstanding credit accounts with late or missed payments. In this case, when a person has trouble making their payments it may be wise to add a small notation on your credit report, explaining the reason your payments fell behind. Lender will see this information when they check your credit history and it may work to your advantage. It’s also to your advantage to obtain a “certificate of satisfaction” if you have “County Court Judgements” or a CCJ brought against you.

Other relevant information credit reporting agencies will disclose on your credit history is are the number of inquiries or how many creditors have reviewed your credit report. Lenders also consider this information and if you have a number of inquiries on your credit report over a short course of time it can deter the lender from extending you credit. For this reason it very important to carefully apply for credit and avoid from applying to too many lenders that may not approve credit on your behalf.

Another reason you could be rejected for credit is, if you don’t have a credit history at all. This is deterring lenders as well because they have nothing to go off of in regards to your merit of paying back your debts. While the best way to receive credit is by having a great credit history and no sign of debt, lenders prefer to see some type of credit history rather than none at all. When your credit history have no debt to report it may be best for you to obtain a credit card and establish some positive crediting scoring on your credit report.

How to deal with credit problems

Generally different lender can use different information to decide if your credit is worthy of a loan. Even though one lender may deny you there are other providers that will approve you for a loan however at a higher interest rate. Under these circumstances it very important to only apply for a loan that is easy for you to commit and afford. Always try to avoid getting a loan to pay off other outstanding debt. It’s always best to consult with your lenders to try and work out payment schedules that are comfortable for your budget and income.