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Refused credit or refused a loan – what you can do

If you’ve been turned down for a credit card or loan, there are steps you can take to find out why. It’s also important not to do anything that might damage your credit rating.

Why have I been refused credit?

There are many reasons why a firm might have turned down your application for credit. These include:

  • your credit score being too low
  • negative information on your credit file, such as records of payments you’ve missed.
  • the lender deciding you wouldn’t be able to afford to repay the credit you applied for
  • information on your file suggesting fraudulent activity
  • a question mark about your identity or address
  • a firm’s legal or policy condition (for example, a lender sets a minimum income level above which a borrower must be earning).

The best next steps for you to consider after having had a credit application declined depends on the reason your application was refused.

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What you might be told if you’ve been refused credit or a loan

A lender will often not tell you why you’ve been refused credit, and they don’t have to provide a reason even if you ask.

But they should tell you which credit reference agency they used to assess your application.

You can then approach the credit reference agency to ask for a copy of your file.

If you spot a mistake in your credit file, write to the credit reference agency and ask for them to correct it.

Make sure you explain why it’s wrong and include any evidence you have.

The agency has 28 days to act. The relevant detail in your credit report will be marked as ‘disputed’ while they investigate it.

Don’t keep applying

If you've been refused credit, think very carefully before reapplying.

Any credit applications you make – successful or not – will show up on your credit file.

Several applications in a short space of time might make lenders think you’re desperate for cash.

This might damage your credit rating further. Your credit rating affects whether you can get credit and how much you can borrow.

It can also affect the interest rate you might be charged.

Borrowing to pay off other debts

If you’re thinking of borrowing to pay off other money you already owe or to pay bills and daily living expenses, it might be a good idea to look at ways of reducing how much you spend on these things. For example, think about how you could try and cut down the size of your overdraft or increase your credit card payments to avoid running up so much interest. You might also look into switching energy suppliers to cut down your household costs.

If you’re already missing payments on essential outgoings (rent, mortgage, Council Tax, energy, water) or on credit cards, loans or other credit, it’s important to contact a free debt advice service as soon as you can.

They’ll work with you to come up with a plan to work out which debts you should repay first, and avoid getting into deeper financial difficulty.

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Before you look into borrowing elsewhere

Being turned down for credit might be a good opportunity for you to think about your current money situation.

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Rebuilding your credit rating

There are steps you can take to build your credit rating

Alternative borrowing options if you have a poor credit rating

If you need to borrow money and you can afford the repayments, there are other options beyond credit cards and personal loans.

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MoneyHelper is the new, easy way to get clear, free,
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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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