5 Reasons You May Have Been Refused Credit

There can be any number of reasons why someone might be refused credit. If you have been refused credit for any reason, you should not panic. Credit is becoming harder to come by for everyone in the present economic climate, but it is not impossible to get. Even those who are refused credit can find a number of solutions by comparing products using a service such as moneysupermarket.com.

There are also ways to fix the situation and improve your credit rating for the future. A credit rating is used by loan providers to assess the credit worthiness of potential borrowers who apply for loans. They obtain the rating from credit agencies that hold information about people's borrowing and how reliable they have been in making repayments.

If someone has ever missed or been late with a payment, even if they have subsequently paid what was owed, this can affect their credit score. However, it is not unknown for credit references to contain information that is out of date. You can apply to see your own credit rating, usually at a low cost, to check that the information held is accurate and to ask for any mistakes to be rectified.

Having a county-court judgment against you is a sure-fire way to be refused credit as any potential lender will see you as a bad risk. Once a judgement has been satisfied, it is very important that this is lodged with credit reference agencies. This fact may well not be removed when it should be.

If you are not registered on the electoral roll, it can have a serious effect on your credit rating. Before looking to take out a loan, mortgage or even a credit card, it is well worth registering with the appropriate local authority and making sure that your name is on the electoral roll.

Incredibly, one reason for people being refused credit can be because they do not have any credit currently in place, or have never borrowed before. Potential lenders like to have some assurance that a borrower has a proven track record of making repayments and managing their credit successfully. This is not possible if you have never taken out a loan or had a credit card. In these circumstances, borrowers can consider a number of lenders who provide 'bad credit' products, usually with a low lending limit, that can be used to build up a payment profile.

Borrowers should look at the credit already available to them when considering a new product. Even if there are no problems, when a potential lender sees a high number of avenues of credit already open to a borrower, they may think twice about the risk that may be involved. If a card has no balance and is not being used, it is worth considering cancelling it to avoid this problem.

Sam is a financial writer for moneysupermarket.com