Being turned down for credit can be disheartening, but you can take steps to help make sure it doesn’t happen again.
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First, understand why you were turned down – asking the lender is a good starting point and they should be able to tell you the main reason.
Perhaps you have missed some payments on cards or loans you have, or there are mistakes on your application form. Missed or late payments stay on your credit report for at least six years. It could be that you’re not on the electoral roll, as that helps to prove your home address.
Making multiple applications in a short space of time can also make lenders believe that you’re in financial difficulties, or even a victim of fraud. Each application is likely to cause the lender to check your credit report and leave a credit application search footprint. Lots of these may cause alarm, regardless of whether or not you were approved, which isn’t actually shown on your report.
With a free 30-day trial of CreditExpert you can see your credit report and Experian Credit Score whenever you want, and get expert advice on improving your financial situation. You can also get help finding finance deals that suit your credit profile.
Top tips on building a great credit rating:
- Use some credit on a regular basis, but never take on more than you can afford.
- Stay within the agreed credit limits and always make your repayments on time, paying more than the minimum off your credit cards each month if you can.
- Space out your credit applications and avoid making several applications close together as this can signal financial stress.
- Make sure you register to vote at your current address – lenders use the electoral register to help confirm who you are and where you live
Get into the habit of reviewing your credit report on a regular basis, paying particular attention to the following:
- Make sure everything is accurate and up to date and query anything that isn’t
- Review financial links to other people and ask for any outdated links (e.g. to an ex-partner) to be broken.
- Explain any missed payments by adding a “notice of correction” – a statement of up to 200 words.
- Review your credit utilisation rates (i.e. your balances versus your credit limits) and aim to keep them below 30 per cent
- Credit scoring can look at the average age of your accounts, awarding extra points for longstanding relationships, so try not to chop and change all of your accounts on a regular basis.
Watch out for unfamiliar or suspicious entries in your credit report. With Experian CreditExpert you’ll get alerts every time there’s a major change to your credit report, which could indicate identity fraud.