Rejected for credit? How to get back on track

Here’s our 10-point action plan to help you get back on track if you’ve been rejected for credit.

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A good credit score means you’ve got access to useful products such as a 0% balance transfer credit card – a great place to park lingering debts while you pay them off.

Ditto getting the thumbs up on a cheap personal loan with regular fixed payments.

But what if your credit score isn’t up to scratch? You might find it difficult to access these types of products.

There are steps you can take to make improvements, and work towards getting better deals on credit.

What’s the problem?

When it comes to credit-based products such as credit cards and loans, banks will simply reject your application if you fail to meet their lending criteria.

And if you rack up a raft of applications, it could further damage your chances of being accepted elsewhere.

Improve your chance of success with this 10-point action plan to increasing your chances of being accepted for credit.

1. Check your score with Credit Monitor

It’s easy to say you should only apply for deals you’re likely to get. But how do you know which ones they are?

One way to get a gauge is to use MoneySuperMarket’s Credit Monitor app.

Credit Monitor provides you with your full credit report for free, along with your credit score. Once you can see your credit score and your credit report, you will have a clearer idea of where you stand, as well as the chance to check for any errors or anomalies.

Credit Monitor showcases the credit cards you are likely to get and the interest rate you’re likely to be offered, reducing the stress and uncertainty of whether your application for credit will go through.

Monitor and improve your credit score

Based on your credit score, we provide you with the reasons why your score has changed and suggest tips and actions you can take to improve your score. Through taking action on our suggestions, you could see your credit score increase alongside the range of credit cards you’re likely to be accepted for.

Check and understand your report

2. Go easy on those applications

Making multiple applications in a short space of time is likely to have an adverse impact on your credit file.

It makes you look a bit desperate – even if you’re not – and lenders don’t want customers in desperate situations.

If you know the likelihood of your being accepted for different credit cards, you can be more selective about which applications you make.

3. Register to vote

Most companies use the Electoral Roll to combat identity fraud.

If you’re not on it at your current address, you risk being rejected due to fraud concerns.

It’s easy to register: just contact your local authority or sign up online.

4. Close unused accounts

You know those old credit cards hanging around in your wallet? They could be the reason your application for a new card is turned down.

Lenders look at the total amount of credit available to you, and they start to fret if you’ve got a lot of unused credit lying around – there’s always the chance you could suddenly use it and subsequently struggle to pay off all your debts, including what you owe them.

You may want to close any old accounts you no longer use, unless that card comes with benefits you don’t want to lose.

5. Pay on time

Missing a payment date is one of the best ways to scupper your chances of being accepted for credit.

Setting up a direct debit or standing order to cover your bills is a good way to avoid mistakes.

If you are struggling to pay, contact the company involved before the payment date so it’s not a shock to their system.

6. Don’t over-extend yourself

Maxing out your credit card can indicate to lenders that you are in trouble financially.

It also makes it much more likely that you will exceed your limit – and be charged accordingly.

To be safe, it is therefore sensible to only borrow up to 30% of your total credit limit at any one time. You can see how much credit you have utilised within your Credit Monitor report.

7. Be open and accurate

Always complete applications for credit accurately and honestly.

Lies will often come out and lead to your application being declined.

8. Build a credit history

Borrowing too much is not a wise move if you want to be accepted for the best credit cards and loans.

But not borrowing enough could also work against you.

Lenders use your credit file to check you are capable of meeting payment terms. So having no or little credit history can prove a problem.

Ways to build one could include opening a bank account, taking out a normal credit card that you pay off in full every month, and using a contract mobile phone – again paying your bills on time and by direct debit if possible.

9. Demonstrate stability

Banks feel safer lending to people who have a history of responsible lending.

So if you have stayed at the same address, stuck with the same job and used the same bank for a long period, it could all work in your favour.

In other words, if you switch banks just before asking for a loan, or apply for a credit card just after moving house you might find getting credit more difficult.

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