If you are constantly being declined finance this could be for a number of reasons that are not necessarily beyond your control. There are positive measures that you can take to help you obtain borrowing in the future. The first step is to obtain your credit history report as this forms the basis of many lending decisions. It is therefore important to check your credit report to ensure that all your information remains accurate and up to date.
This report basically contains accumulated information about your personal financial situation. It consists of your public records such as bankruptcies and County Court Judgments as well as details provided by financial institutions and lenders with whom you have had loan applications in the past. These records are often accessed by credit score companies to determine whether your application for finance should be approved.
What is a Credit Score?
To answer the above question, it is useful to note that your credit score often plays a primary role in the decision as to whether you should be approved for a loan. If your score is low, it sends a message to lending companies that you present a high risk. On the other hand, if you have a high score you are more likely to be accepted for a loan.
Credit reports are just one of the sources of information that can be used when calculating your credit score. The companies involved also use information about your age, marital status, employment etc. depending on the stipulations applied by the particular company; and the process is often automated. Therefore, your score could vary from company to company, and they are not legally obliged to divulge the details.
How Can I Check my Credit Score?
Although it isn’t always possible to obtain your credit score in the UK, you can examine your credit report. To do so, you should start by approaching the company that turned down your application for borrowing and ask if they used information from a credit reference agency in reaching their decision. If so, you can ask for details of the particular agency and approach them direct. They have to provide a copy of your report by law although they may charge a small admin fee.
Once you have received your report you can check the information that it contains. Facts relating to CCJs, payment arrears etc. should only be kept for six years so if the information is more than six years old you can ask to have it removed. Likewise, if any information is inaccurate, or your financial circumstances have now improved, you can ask for a ‘notice of correction’ to appear on your credit report.
Other Methods of Improving your Financial Standing
Another way to make positive changes to your financial standing is to avoid reaching the maximum limits on your credit cards as this could be interpreted as overspending and could have a negative impact. On the other hand, if you don’t have any cards or loans, it could be a good idea to apply for one as this could give you the opportunity to show lenders that you have the capacity to meet your financial obligations.
With any existing loans or debts, make sure that you always make the repayments on the agreed due dates. This will greatly enhance your reputation as a responsible borrower and increase your chances of being accepted for finance. When your loan applications are declined repeatedly these are noted on your records and could reflect badly on you so it is important to be aware of that fact.
If you have a poor payment history then you could benefit from applying for finance from a company that specialises in this type of borrowing. This will narrow down the chances of being refused finance and therefore minimise the number of applications that show on your report. Once you have successfully obtained finance you can start to rebuild your payment record to enhance your chances of obtaining funds in the future.
