Why Was I Refused Credit?

Wednesday, October 13th, 2010 at 4:05 pm

Obtaining credit is not a right, it is a privilege. If you take care of your credit your credit can take very good care of you by giving you the best interest rates and deals. From credit cards, personal loans and mortgages, good credit is important if you want to borrow money at a reasonable rate.

When you apply for credit in the UK, your credit history will be reviewed by the lender. They will contact a credit reference agency to review your credit file. If you have failed to repay any debts or are currently behind in any repayments, this will have a negative affect on your chances of getting accepted for any financial products.

In today’s climate it is harder than ever to get credit. If you have applied for quite a few financial products lately, this will be recorded on your credit file. Lenders may well view this in a negative light even though you may have just been shopping about. You should limit your applications and only apply for the product once you are sure it is the best deal.

When a lender checks your credit file, they will not only look if you have missed payments, they will also review the debts you credit file uk already have to make sure you are no overburdened. If they believe you are a risk due to you having too much finance, they may well turn down your application for credit.

Lenders will look at your current income and expenditure and if they feel that you have insufficient funds for the new finance, it may be time for you to evaluate your financial situation. Once you have been refused credit due to overcommitment you need to take stock of your finances to make sure that taking further credit will not be a temporary fix. If you feel that your monthly outgoings are becoming unaffordable, taking out more credit is definitely not the solution.

If you get declined for credit, lenders are usually not too forthcoming with specific reasons on why you were declined. They will normally issue you with a standard statement…”We use a credit scoring system etc etc…” This can be hugely frustrating but the fact of the matter is that lenders are not obliged to give you any specific reasons on why they declined you for credit.

The lender will usually give you the credit reference agency’s contact details in order for you to get a copy of your credit file id you wish. These credit reference agency’s hold all of the information when it comes to credit cards, loans, store cards and any other financial product which you had to sign a credit agreement to take out.

When you get your credit file you should carefully review it. If you believe your credit file contains incorrect information, you should contact the agency and point out the error. Credit reference agencies will not simply take your word for it, so you will have top be prepared to back up your claims. Getting your credit file should give you an indication on why you were refused but lenders in the UK do have the right to decline you at their discretion.