When doing research for a loan make sure you don’t actually apply for several loans at one time. This is because, if you make several full scale applications, these will leave a credit search record on your credit file. Multiple applications often indicate multiple refusals, so new lenders looking at these records will probably assume that other lenders have turned you down and may follow suit.
Therefore the best policy is to look for loan agreements in principle without allowing a full credit search, and only make one real application when you have decided which is best for you. If you are ever refused credit, don’t apply again until you have found out why this has happened. Now is the time to check your credit record. You should ask the lender why they have turned you down. Lenders are not legally obliged to tell applicants why they have been turned down but most will.
What are lenders looking for? Obviously it’s very important to the lender that you should handle the repayments of your loan and if you have been largely credit free in the past you might find it difficult to get the best rate for your loan. The only way a lender can judge your ability and attitude towards repaying loans is your credit track record so although you might think because you haven’t been borrowing regularly you’re a good bet the lender might not see it that way.
If you can show that you are capable of managing your money properly, maybe by having a credit card and a mobile phone and keeping them in good standing then possibly this might bring the best rate loan offers closer to you
One thing you can’t be when applying for loan is overstretched financially. Your credit records are there for all lenders to see and they can see immediately what your monthly commitments are and also how you have been handling those commitments. They can also see your credit limits so it’s a good idea to cancel any unused credit cards as those low limits could put a lender off you. If other lenders are only allowing a little then why should the new lender have confidence?
Explain your special circumstances. If you have a bad credit record, or you are currently having some financial problems, it makes a lot of sense to seek advice rather than simply borrow more. If you have ever missed repayments in the past they remain on your credit record for at least 36 months. IVAs, Court judgments and bankruptcies stay on the record for at least six years.
If Special circumstances have affected your performance on a finance agreement in the past then explain these circumstances. For instance if you have been ill or had an accident and this affected your earnings and therefore your ability to pay temporarily you can make a note on your credit file and lenders will certainly consider this when looking at you for a loan
If you are having trouble getting a loan make sure you stay away from companies who say they can repair your credit record. Unless a serious mistake has been made on your file this is not possible and if a serious mistake has been made then you can easily repair this yourself. Never fall into the trap of paying for credit repair or debt advice which means rescheduling debts.
There is usually a good reason for credit being refused to you. If you are struggling financially then the wisest step is first of all to review your spending. A good mover could be to consult with a debt councilling service.
One very simple and quick way to improve your credit rating is to register on the electoral roll if you aren’t on it already. Credit reference agency Experian tells us that lenders use the electoral roll as a precaution against fraud, to help check that you are who you say who you are and live where you claim to live. If you are registered at a different address to the one on the application form, or don’t appear on the electoral roll at all, they may ask for proof of residence or could simply turn you down.