Credit refusal interactive guide

Go back and ask the lender why. Banks and lenders should give you the main reason or reasons for refusing credit, if you ask.

If necessary, speak to someone more senior or someone in the lender’s underwriting department. Be polite but firm and put your request in writing if necessary. If they refuse to help you, make a formal complaint.

Get a copy of your credit report from the credit reference agency/ies the lender used.

Check for errors, including debts you disagree with or previous debts that are correct but not showing as paid off. If there are errors, ask the credit reference agency to raise disputes for you with the relevant organisations until they are fixed.
Negative information in your name usually stays on your credit report for six years and can’t be removed sooner if it is accurate. However, if there were extenuating circumstances, such as losing your job or going into hospital, you can add a note to your credit report to explain this. Read about notices of correction on the Experian website.

Negative financial information about other people you have linked up with in the past won’t be included in the report you see but you will see their name in a section about your ‘financial associations’. By ‘linked up’ we mean applied for credit together - simply being in a relationship or living with someone doesn’t count. If you are no longer linked to a person shown on your report then contact all three credit reference agencies and ask for a financial ‘disassociation’.

If/once your credit report is correct and up to date, consider using a comparison and eligibility service, such as that provided on the Experian website, to find credit offers you’re likely to be accepted for. Alternatively, you may want to go back to the lender that refused your initial application and ask them to look at it again.

There may be a legal reason why the lender cannot provide credit, for example, because you are underage or have an undischarged bankruptcy order. Go back to the lender and ask for more information and, if possible, some guidance.

Lenders also have specific policies on who they will lend to. This is not purely based on your credit report or your credit score but includes other relevant information such as your income (they may set a minimum income for certain products) and, for example, whether you’ve been insolvent in the past.

If one lender refuses to lend to you then you might consider using a comparison and eligibility service, such as on the Experian website, to help you apply for deals you’re likely to get.

If you are really struggling to make ends meet then you should consider seeking free, confidential, expert advice – and the sooner you do this the better.

Check out the Money Advice Service website for sources of independent, free advice and support.

Borrowing further money at this stage could make your situation worse.

If the lender has refused credit because of an affordability issue they are basically saying they don’t think you can afford the repayments, either now or in the future.

If you disagree, consider going back to the lender to argue your case, offering any relevant evidence to support your case.

Alternatively, use the opportunity to sit down and review your finances to see if you can increase your income and/or reduce your spending.

Tips on reviewing your regular spending
Go through your bank and credit card statements. For things you regular spend money on, ask yourself whether you need it and, if you do, can you get it cheaper. Millions of people are overpaying for utilities and financial products in the UK. Use comparison services to see if you can switch and save.
Draw up a budget
Include paying down existing debts. Make sure your budget is realistic and then stick to it. Try to allow yourself the occasional treat.

If the lender thinks your application was fraudulent in some way, they may be reluctant to give you very much information about their decision. However, it’s worth trying to find out more and to argue your case if you are innocent. You can ask the lender to review their decision and offer them evidence to support your case.

If you have been a victim of identity fraud then make sure you alert the credit reference agencies because they will be able to offer help clearing up your credit report. If you contact one of the three main agencies they will be able to alert the other two for you. If necessary, they can also help you add security features to your credit reports, which can be useful if further fraud is likely.

If the lender could not confirm your identity, offer to provide physical proof of your name and address. This usually takes the form of original, recent bank statements or utility bills, and a copy of photo ID. They may then be able to reconsider your application. As some lenders use your credit report to help confirm your name and address, take the opportunity to review your credit report with all three main credit reference agencies. Make sure your name and address is shown correctly and you are registered on the electoral roll.

Start by getting your credit report from the credit reference agency (or agencies) that the lender consulted. Then check through the information carefully. Remember that the lender used this information to help calculate your credit score.

You find contact details for each agency on the Money Advice Service website.
Once you’ve got and checked your report/s, are there any errors?

Ask the credit reference agency concerned to dispute the relevant entry/ies for you. If necessary, they will contact the provider on your behalf to check the accuracy of the information and then update your report if necessary once a reply is received.

If you and the lender cannot agree on the facts, the agency will help you decide what to do next.

Go back to lender and appeal. Under the Data protection Act you have the right to challenge a decision reached purely on a score, by asking for the lender to review your application manually (ie by a person).

This also gives you the opportunity to argue your case, if applicable, by providing additional supporting information such as proof of regular bill payment (not included in your credit report).

Get tips on how you might improve your future score: read this article on improving your scoreby Experian

Find credit products more suited to your current score by using a comparison and eligibility service, such as that provided on the Experian website.

You may wish to challenge the credit refusal and argue your case. Under the Data Protection Act you can appeal a refusal based purely on a score by asking the lender to review and reconsider your application. This would be referred to a person and you could use the opportunity to provide extra supporting information, such as proof of a regular bill payment not included in your credit report.