Money Advice Service

If you’ve been turned down for a credit card or loan there are steps you can take to understand why. There are also things you should avoid doing which could make it even harder for you to get credit in the future. Read on to find out more and to learn about alternative borrowing options to consider or avoid.

What you should be told

If you’re turned down for a loan or credit card, the credit card or loan company should tell you whether you were turned down as a result of a search on your credit file and, if so, which credit reference agency they used. You can ask for more information about why you were refused but they don’t have to give you a detailed reply.

Don’t keep applying

If you have been turned down for a credit card or loan, the worst thing you can do is to keep applying for more credit because any credit applications you make – whether or not you’ve been successful – will show up on your credit file. Several applications in a short space of time may make lenders think you are desperate for cash and this will damage your credit rating further. Your credit rating affects whether you can get credit, how much you can borrow and – sometimes – the interest rate you may be charged.

What to do next

What to do next depends on why you are looking for credit.

If you need to borrow to pay off other debts

If you’re looking to borrow in order to pay off other debts or to help you pay bills and living expenses at the end of the month then it’s worth talking to a free debt adviser as soon as you can. They will be able to help you come up with a plan and avoid getting deeper into debt. Follow the link below for more information.

Where to go to get free debt advice

If you’re looking to fund a purchase and can afford the repayments

If you’re looking for credit to fund a purchase, such as buying a car, and you can afford the credit or loan repayments, then check your credit rating. You do this by getting hold of your credit report – this is crucial in influencing the lender’s decision about whether to give you credit or not.

You can see your report by subscribing to a full credit report service or just buying a one-off report.

Read our guide How to check your credit report

Before you look to borrow elsewhere

If you’ve been turned down for a loan or card it could be a good opportunity for you to think about your current money situation.

If you already have debts you’re struggling to repay, you should talk to someone about them. There are a number of organisations that offer free, confidential debt advice.

Where to go to get free debt advice

If you have paid off your debts, you should think about trying to save some money if you can to build up an emergency savings fund.

Living on a low income – tips

Use our Budget planner to see if you can make any savings

Alternative borrowing options if you have a poor credit rating

If you need to borrow some money for a purchase and you can afford the repayments, there are other options beyond credit cards and personal loans.

Credit unions

If you need to borrow some money at an affordable interest rate, find out if there is a credit union near you. Credit unions are non-profit organisations that have been set up to help people in their local communities. There’s a cap on the amount of interest they can charge on their loans of 2% a month or 26.8% a year APR and there are no hidden charges or penalties if you repay the loan early. With some credit unions, you have to save for a period before you're allowed to borrow.

Read our guide to Borrowing from a credit union

Budgeting loans from the Social Fund

If you desperately need to borrow money, you may be able to apply for an interest-free Budgeting Loan from the Social Fund. Alternatively, other help may be available from your local authority in England, or the Scottish and Welsh governments.

Read about Budgeting loans from the Social fund

Lenders of last resort

Think carefully before borrowing using payday loans, home credit or by using a pawnbroker. And avoid illegal loan sharks altogether.

Payday loans

Taking out a payday loan can be a very expensive way to borrow. The average payday lender charges £25 interest for every £100 borrowed, if you pay it back on time (ie within a month). As a comparison, the average credit card would charge you £1.52. It’s also all too easy to roll over your loans from month to month and lender to lender, leading to your initial debt quickly growing into an unmanageable one.

Find out more in our guide to Payday loans

Home credit or doorstep lending

Home credit, also known as doorstep lending, is when a salesperson lends you money at your home. It can be very expensive so think very carefully before you take on this type of loan. For example, if you borrow at a high interest rate, will you be able to pay off your loan? Make sure you only use a licensed lender and don’t borrow from anyone who calls at your house you offering a loan as this is illegal.

Read more in our guide Home credit or doorstep lending


Pawnbrokers will lend you money but at higher rates of interest than high street banks and you’ll have to leave something valuable, normally jewellery, as security. The item is known as a ‘pawn’. If you can’t pay back your debt, you’ll lose your item.

For extra peace of mind, check that your pawnbroker is a member of the National Pawnbrokers Association, a central organisation that promotes high standards of business conduct.

Read more in Pawnbrokers – how they work

Loan sharks

Loan sharks are illegal lenders who often target low income and desperate families. They may seem friendly at first but borrowing from them is never a good idea – even if your credit rating is poor or you only need a small amount for a short while. Avoid them at all costs.

As they are not licensed, loan sharks will charge extortionate rates of interest and you may be harassed if you get behind with your repayments. If you owe money to a loan shark, you do not have to pay it back as they are illegal. Report them to the Stop Loan Sharks team.

Find out more about how to spot them in our guide to Loan sharks

Contact the Stop Loan Sharks team

Cash for gold

If you want to sell old gold there are several different options to choose from including postal gold sites, specialist gold merchants (in London and Birmingham’s Jewellery Quarters), TV gold sites and traditional pawnbrokers. Think very carefully if you are considering selling gold to get hold of cash.

See more in our guide to Quick access to cash your options

Rebuilding your credit rating

There are steps you can take to rebuild your credit rating after being in debt.

Read more in How to improve your credit rating

This article is provided by the Money Advice Service.


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