Finance Roll

It can come as a shock if you are turned down for a credit card or loan, especially as many credit card companies and banks are criticised for irresponsible lending and almost forcing loans upon us.

When we the consumer apply for a loan, credit card or mortgage a credit score will be calculated by the lender by using the details from your credit report and application form. The way your credit score is calculated varies depending which lender you are using. There are a few common reasons why a person may be turned down for credit.

Many people do not realise that is you have never had credit of any kind you can be refused credit. This does seem ridiculous but the reason for this is that lenders prefer to see that you have a credit history of debts that have been repaid without any delays or problems. Obviously if you have never had any credit this could prove difficult, if this is your situation I would recommend that put a small amount of money on a product that is easy to obtain such as a store card. Make sure you pay it off regularly and on time. This will help build up your rating as the lenders like to see a track record this can be a good option for younger consumers. If you have no track record a lender cannot predict how you may behave in the future as there is no evidence of you being someone who manages credit well.

Circumstances can be different to this it may be that any mortgage or secured homeowner loans were paid off many years ago and you simply have not needed to use credit. If this is the case you should explain the situation to the lender.

Lenders use different types of credit scores, this means they award different points for different details. This means they can target certain groups of consumers for the product they offer. If you do not fit into this bracket (you may simply be the wrong age) the lender will turn you down as you do not fit their lending criteria.

Another common reason for being turned down for credit which is not commonly known is that you have had too many credit checks carried out in a short period of time. Each time that you apply for credit the lender will carry out a search on your credit report, each of these searches leaves what is known as a footprint. I remember being turned down for credit when buying a sofa which was a complete embarrassment; it turned out that because I had been shopping around for secured loans too many footprints appeared on my credit report. If you have too many footprints on your credit report this makes lenders think that you are possibly a fraudster using someone else's identity to obtain credit or that you are desperate for cash and overburdened with debt.

You might be refused if you have had problems with credit in the past, I know someone who had serious problems obtaining credit after missing payments on a bridging finance loan. A missed credit payment stays on your record for three years and lenders take a very dim view of the past. If you have very serious financial difficulties that result in a County Court Judgement against your name it will be held on file for six years. If you are unfortunate enough to have to go through bankruptcy, restrictions can remain on your file for up to fifteen years. Consumers can leave explanations on their file through a credit reference agency. This can enable the consumer to give reasons for the missed payments on their report whether it is because of a loss of job, illness or going through a divorce that meant they could not make payments.

This problem is easily fixed which makes a change in the list. If you are not registered electoral roll you will be turned down for credit as lenders use this to check you are who you say you are. To remedy this simply register on the electoral roll and make sure that you are no longer registered on the electoral roll for other addresses.