When applying for a loan, there are no guarantees, meaning every application is a waiting game to finding out if you have been approved or declined. Some lenders are quicker than others to provide this decision, but it still leaves you going into the unknown even if you know you have a good credit history. So, what do you do when you get that refused decision? Here are some handy tips to help you with the next steps and finding the approval you seek.
Find Specialist Lenders
Don’t feel too disheartened if you are declined with your first choice, as the good news is there are plenty of options out there. However, rather than applying for the next lender on a list, doing a bit of research can help you find specialist lenders instead. Whether you are wanting a personal loan, instalment loan or a payday loan, it’s better to find a lender that can help those who have been refused credit. There are many specialist lenders available online that can help those with a bad credit history or who have been recently declined, that are Financial Conduct Authority (FCA) approved. This way, not only will you be using a trusted lender working to responsible lending guidelines, but one that can focus on what you can afford to pay over your credit history.
Check Your Credit File
Sometimes a refused credit decision can be a surprise, especially if you are not aware of any issues on your credit file. So, rather than wonder what could have caused a declined decision, check your credit file to see what the issue is. If you have never done this before, or it has been a while since you last checked, you can do this by contacting one of the Credit Reference Agencies (CRAs) that includes Experian, Equifax, and TransUnion. You can do this online and see for free the basic information relating to your credit file. Some paid for services will allow you to see even more detail or ongoing monitoring, but you will be able to see your current credit rating and highlighted issues that could be causing a problem for free. Something as simple as an error in your address history or missing credit accounts could be bringing your score down. Also, you’ll see any recent missing payments you weren’t aware of or other activity that could be harming your score, so that you can look to rectify them quickly.
Avoid Multiple Applications
Once you have been refused credit, you may be tempted to move on to the next lender and apply straight away. However, this may cause you more harm than good on your credit file, as multiple applications within a short period will not look good to other lenders. It can also quickly increase the amount of declined decisions you receive and in effect decrease your credit score, making it more difficult to find a lender willing to help. Review the situation if refused credit and look for lenders who are in a better position to help you than the bigger, traditional lenders. This will help you reduce the number of applications you are making and find the credit you need faster.
As well as the above, you’ll want to ensure you can afford the loan you are applying for, as many lenders will want to review your current finances as well as your credit history. Make sure you can cover the repayments you want by comparing your income with your essential outgoings and reducing any non-essential spending. This way, even with a bad credit history, you’ll be able to prove your affordability and increase your chances of being successful.