Been Refused Credit? What Happens Next?

It can be a frustrating experience if you’ve applied for credit and been refused. What happens next can depend on the reason for borrowing and if the application refusal came as a surprise to you.

A refusal of a credit application can happen for a number of reasons, such as:

• Incorrect address details
• Presence on electoral registers
• Credit history
• Existing borrowing levels
• Historic financial records – such as bankruptcy or late/missed payments

A refusal of your credit application can also sometimes point to an instance of identity theft, so it is important to ascertain the reason for refusal. Do not be tempted to apply again until you have investigated the reason for refusal, as multiple applications, whether you are refused or accepted, can have a negative impact on your credit score. The type of borrowing you qualify for can also be affected by multiple applications over a short space of time, as lenders can often perceive this as desperation.

How can you find out why you’ve been refused credit?

Gaining access to your personal credit records is an important step into finding out why you’ve been refused credit. This is particularly important if you have had an unexpected refusal for a credit application.

Contact a reputable credit reference agency to help you access your credit score report. There are four main UK credit reference agencies – initial access is often free, but there are paid subscription services available, should you wish to use your credit profile to strengthen your borrowing position over time and use it to delve deeply into your credit history.

Once you have access to your credit records, go through the details carefully to try to ascertain why you’ve been refused. There is often a note against the application with this information. If you spot any entries that seem unfamiliar to you, check them carefully, as this may indicate fraudulent activity.

If you suspect you’ve been a victim of identity theft, then this must be addressed as quickly as possible and the relevant organisations contacted. You can find out more about what to do next at Cifas, a not-for-profit organisation that offers consumer advice about handling potential identity fraud and protecting yourself against future issues.

What is Protective Registration and how could it help?

Protective Registration is useful for individuals that suspect their personal data may have been compromised by a third party. For a small fee (around £12.50 per year, min. 2 years), Cifas add a request lenders, landlords or employers to perform an additional layer of identity verification to ensure it is genuinely you making the application.

Protecting your identity and safeguarding your credit report are critical factors to consider when thinking about taking on borrowing. Always make sure you can handle repayments before you apply and if you think you may be refused, access your credit report to double-check first, as every rebuttal garners a negative impact on your overall credit score.