This is a common issue and one that many may face in their lifetime. Having your application for a loan or for a certain type of credit rejected can be disheartening, leaving you feeling deflated or otherwise defeated. Thankfully, there are many proactive steps that you can take after your application has been denied, and they will form the focal point of this guide piece. We will list for you the things that you can do in order to improve your understanding of the rejection, whilst also providing you with some advice regarding future applications for credit.
These are the next steps that you should take in the event of your loan or credit application being rejected.
Wait Before Making Another Application
Every application you make for credit or a loan will appear on your credit file and could stay there for a period of time (exact time periods will vary). Therefore, if you make another application for credit after being rejected then the next lender that you apply to will see this failed application, which could lead to another rejection and will tell other lenders that you are potentially desperate for credit or currently in a bad financial situation which will ultimately act as a deterrent. So, before you make another application for credit, it is important to understand why your first application was rejected in the first place.
Work Out Why You Were Rejected
There are multiple reasons why your application could have been rejected and you should try to understand these reasons or at the very least be aware of the causes of rejection so that you could identify and then try to rectify the issue(s). Once the issues themselves have been addressed, this could get your credit score back on track, which could in turn facilitate successful applications for credit in the future. The following are reasons why your application may have been rejected:
- Your address or your identity couldn’t be confirmed by the lender. This can occur if you are not registered on the electoral roll. This can also occur if you changed your name or moved address without informing your bank, for example.
- Insufficient credit history. If you have never had any form of credit before then this can deter lenders as there is insufficient data regarding your eligibility or suitability as a candidate
- If you have been a recipient of credit in the past, but have numerous or even just one single instance of a late payment, a missed payment, a default, or a CCJ (County Court Judgement) on your credit file, then this could inform the lender that you are a risk regarding credit or a loan
- Currently having a debt management plan, or something of this ilk, in place will suggest to lenders that you currently do not have the financial flexibility to accommodate any more credit or loans
- If you have completed multiple applications for credit in a short space of time then this could indicate to lenders that you are experiencing financial difficulty, and are therefore a risk
- Mistakes on credit files are surprisingly common. If your address is noted incorrectly, for example, then this could be flagged as a mistake and might be dragging your score down unnecessarily
If you have had an application for a loan or for credit rejected you should be certain that you understand the above reasons as you can then work out which one or which several apply to you. Once you have worked this out you should then proceed to addressing and then fixing the aforementioned issue(s). In the case of a default or a CCJ, it is important to be aware that improving your score will take time and you might have to take quite large steps towards this improvement, as well as being patient regarding time-scales.
You could also secure yourself a full copy of your credit report. This will give you the complete picture. If you wanted to go one step further you can ascertain copies of your score from the main three providers of credit scores so you know exactly what the issue(s) are. The main three providers being:
- Transunion (formerly CallCredit)
Lastly, you are well within your rights to ask the lender who rejected your application exactly why you were not accepted; this can be done by contacting them via telephone, email, post or live chat. They are not obliged to tell you the exact reasons however, and may simply say something along the lines of: “you did not pass our credit check” or “you did not have a high enough credit score”. On the other hand, they may also be more forthcoming and the information that they give you can be used to actively improve your score.
Consider Loans For Those With A Low Credit Score
If your application was rejected because your credit score was too low then you can consider applying for a loan or for a credit card that is designed specifically for individuals who have a low credit score. This is not an avenue that should be undertaken lightly, as often the terms and conditions etc of such loan/credit products are not favourable; inclusive of high APR and associated fees. If you desperately need a loan, or an emergency cash injection then this is an option that is open to you.
When You Should Make Another Application
We would suggest that you wait at least 1 month before you make another (or at the very least a similar) application for credit. This will give you time to address the issues on your credit report. It could also give your credit score time to recover and to improve, though if your credit score is especially low, and you have taken gradual steps towards improving the score itself (securing a credit builder credit card, for example) then it could be best to wait longer before making another application. This is because it might take some time for your score to increase dramatically and to reflect a positive change in the management of your personal finances.
As we stated at the beginning of this guide, we understand that having loan or credit applications rejected can be upsetting. Thankfully, there are steps that you can take to rectify this issue. Firstly, you could (before you make another application with a different lender or for a different loan product) work out the root cause of your applications rejection. By doing this, you could then take proactive steps towards resolving the issue. This in turn could improve your score whilst ultimately improving your chances of getting approved for loans or credit cards in the future.
Here at Wizzcash, we specialise in the provision of payday loans and short-term loans. If you would like to learn more about our payday loan product then please follow this link. If you would like to learn more about us as a company you can do so on our about us page. Or, to get in touch with us, please use the contact form on our contact us page.