Why has my application for credit been
turned down?
When you apply for credit, a lender will look
into your credit history by contacting a credit reference
agency. If there is evidence that you have failed to repay your
debts in the past, this will affect your chances of getting a loan
or credit card. Late payments, Default notices, County Court
Judgments and Repossession Orders may all result in a
refusal.
Lenders will also take into consideration the debts
you have already and compare this to your income. If they believe
you have insufficient funds to repay the loan, again they will turn
down your application.
Sometimes, if you have been "shopping
around" for credit, there will be a number of searches recorded on
your credit reference file. In some cases this may be sufficient
reason for lenders to refuse to grant you any further credit even
though you may have no intention of taking up all the offers. The
best way to avoid this is to compare companies by rates and
quotations without actually going through a full application with
each one.
Lenders should give you an indication of the
reasons for refusing you credit.
When this happens it may be
tempting to turn to a credit repair agency. This is very unlikely to
be a good idea and in some cases may make your situation worse.
I have seen
an advert for a "credit repair" company. What do they
do?
Claims made by credit repair companies that you
can have County Court Judgments or any other records removed are
false - this can only be done if they were incorrectly registered or
if the action against you has been discharged.
There are
legitimate ways in which Judgments can be set aside - for instance
if the sum is paid within a month of Judgment or if a person
genuinely has not received the relevant summons. Information on what
to do in these circumstances is available free from the county
court.
In a report published in May 2000, the Office of Fair
Trading warned against relying on credit repair companies and
suggested that some such companies are simply fronts for a lender or
broker trying to sell you a loan. Credit repair companies are unable
to do anything that you could not do yourself.
What to do if you think your
credit reference contains incorrect information.
A
credit reference agency must investigate your claim that the record
is incorrect. If you believe there are incorrect entries, contact
the agency immediately and try and give as much proof as possible in
order to back up your argument. For example, send copies of any
correspondence you had with that lender. If you believe a has
been incorrectly registered, contact your local County
Court.
If the
lender believes you would be unable to repay the credit
agreement:
Lenders will look at your current income
and expenditure and make a judgment as to whether you can afford
repayments on a loan. If they feel that you have insufficient funds
to do so it may be time to evaluate your situation. Once you have
been refused credit on these grounds you have few options left.
If you feel that your monthly outgoings are high due to
existing debts, taking out more credit is not the answer. Rather
than borrowing from Peter to pay Paul, address your financial
situation. in order to help you assess whether or not you can
realistically manage to make the necessary repayments. If you find
that you cannot, then seek help. If you continue to borrow money you
risk making matters worse so contact a debt advice agency for free
advice.
If you need further help dealing with creditors,
please contact us on 0800 074 6918 or email us at: info@insolvencyhelpline.co.uk.
