Getting rejected for a loan isn’t fun. It’s disappointing, frustrating and a little bit upsetting. But if you have been declined for loan don’t worry you’re not alone.
According to a survey by uSwitch, one third of the UK population has been refused a loan because their credit score isn’t quite up to scratch.
Even worse, 57% of those aged between 18 and 34 have been rejected for a loan, and of those 65% have been rejected more than once and almost 25% have been rejected more than five times.
But, being rejected for a loan isn’t the end of the world. Far from it, actually. There are still plenty of things you can do to get credit.
Here are our top tips for getting credit after you’ve been rejected for a loan.
Find out why you were rejected for a loan (and check if there hasn’t been a mistake)
If you’ve been rejected for a loan, you should be told if you were refused because of your credit history or a search on your credit file.
And if this is the case, you should also be made aware of which credit agency they used to perform the check.
If you think there has been a mistake, make sure you have evidence to support your case and present it to them. You can then put your application into dispute.
Don’t apply for another loan straight away
If you get rejected for a loan, try to resist the temptation to apply for another line of credit straight away.
Although it’s incredibly tempting, it can significantly damage your chances of being accepted for credit.
When a lender sees that you’ve been applying for (and getting refused) lots of credit, it acts as a bit of a red flag. In general, people only apply for lots of loans in a short space of time in two situations: when they’re in a bit of financial trouble or when they’re anticipating financial difficulties in the near future.
Unfortunately, both of those situations don’t make for a suitable candidates to lend money to and leads to more rejected loan applications.
Find out your credit score
The uSwitch survey discovered:
Nearly half of young people (49%) turned down didn’t check their credit report before applying for credit… [and] over a quarter of Brits (27%) who don’t know their credit score don’t want to pay for the information but if it was free, 83% of these said they would check it.
Well, there’s good news. Thanks to services like Experian and Clearscore, you can now find out your credit score for free. Not only will knowing your credit score give you an idea of why you might have been rejected for a loan, it’ll also help you see which products you’re more likely to be accepted for. (We’ve put together a quick guide to finding out your credit score for free, too.)
Take care of the little things that affect your credit score
Little things – like unused lines of credit and not being on the electoral roll at your current address – can make a big difference to your credit score and take minutes to fix. Once you’ve found out your credit score, make sure you’ve taken care of these little details before you think about applying again.
Find a loan that matches your credit score and circumstances
Nowadays, not only are there loans for almost every circumstance, but there are companies that specialise in lending to people with certain credit scores.
By looking for products that match your credit score and companies that lend to people like you, you’re far more likely to be accepted to borrow money. (Even if you’ve got a poor credit score, there are options – like guarantor loans – available to you.)
Take advantage of eligibility checks
Nowadays, most loan companies offer a free eligibility check on their products. Take advantage of it!
These eligibility checks perform a soft search on your credit file (which means that it doesn’t affect your credit score) and give you a good idea of whether you’ll be accepted, how much you can borrow, what you’ll have to repay a month, the APR and interest, and what type of loan you’ll have to take out.