Why am I being refused credit?

March 1, 2013

According to recent research from the Office of National Statistics (ONS), Scotland has the lowest level of personal financial debt in the UK. However, many Scottish residents are still turning to credit to pay the bills.

Having a credit application declined can be disheartening, but it’s important not to panic. There could be many reasons which could easily be resolved and further applications for credit aren’t necessarily the answer. In fact, multiple refusals will leave a trace on your credit score, which will be detrimental to your credit rating.

Every time credit is approved, there’s a possibility it won’t be repaid. Because of this, lenders take necessary steps to ensure they only provide credit to those who pose a satisfactory risk.

The Consumer Credit Act 1974 provides regulations for credit providers and explains the rights of applicants. If you are refused credit, as an applicant, you have a right to the name and address of the credit reference agency where the information was requested. You do not have an automatic right to the reason why you were refused, however, the lender is obliged at least to give you an indication.

Once you know, broadly why you were refused, you can address the problem. Often, you can provide evidence to contend the credit providers’ decision. If you are still refused, options such as registering on the electoral roll or checking your credit report are other ways in which to assess and improve your credit situation.

If you’re already defaulting on current payments, then you won’t be a desirable candidate for lenders and it’s best to get independent professional advice to consider a suitable debt solution before taking out more credit. Our experienced team at Scotland Debt Solutions can offer impartial advice on the best debt solution to support you. Often getting these debts under control is all that’s required to repair your credit rating.

Perhaps you’ve never taken out any credit. This results in you having no credit rating. If you’ve never requested credit, lenders don’t know whether you can manage the repayments, and therefore are reluctant to lend. In this scenario, you need to apply for credit suitable for people with a low credit score.

Some credit cards are specifically built for those with a low credit rating: for example, store cards often accept applicants when credit cards won’t. Regularly paying off a store card balance in full can prove to credit providers that you’re able to handle repayments and in turn improve your credit score. However, be careful to choose the right card for this purpose, as store card interest rates are typically quite high. It’s important to obtain specialist advice if you’re unsure, to assess whether this option is suitable.

Once you’re confident your credit rating has been improved you will hopefully be in a position to successfully apply for credit a second time. Why not call Scotland Debt Solutions today to discuss your credit rating and our friendly, approachable consultants can offer expert advice on your current situation.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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