Turned Down: What to Do When You Can’t Get a Loan

by Redeeming Riches on February 19, 2014

It is frustrating and disappointing when you are turned down for a much-needed personal loan, but you should certainly not give up trying to obtain the financing that you need and instead concentrate on some positive action that you can take to find out the reasons you were refused and how to try and improve your chances of being accepted when you apply again.

Stop applying

The first and most important point to remember is that you should not keep applying for credit elsewhere if you have recently been turned down for a credit card or a loan. Making further applications for financing is probably the worst thing that you can do because every application you make will show up on your credit file.  This means that lenders will interpret your numerous attempts in a short space of time as a sign that you are desperate for cash and will only worsen your credit rating.

Credit file

If you get a refusal you should remember that all lenders have a slightly different criteria they use to decide if you are eligible for a loan, and you could well be accepted somewhere else without any problems.  But, you need to see what is on your credit file before you apply again so that you can confirm if there is any obvious reason why you were turned down in the first instance.

There a several credit reference agencies in the UK who compile and hold information about your financial transactions and identity, and when you apply for credit you normally sign to agree that the lender can view this file to help them make their decision.

Apply for a copy of your credit file and check to see if there are any transactions on there that you don’t recognise or believe to be wrong. Mistakes can be made, and if you spot an error or consider that something on your file needs an explanation then you can write to the agency who then have 28 days to act upon the information you have given them.

Improve your chances

If you can afford the repayments and don’t have any bad debts then there should be a good chance that you can take steps to improve your credit rating in order to get the finance deal that you want. There are some excellent deals available at the moment on personal loans and rates from lenders such as CBonline are as low as 4.7% APR, so it makes sense to try and get the money you want and can afford to borrow by making sure your credit score is as good as it can possibly be.

Sometimes the reason you get refused credit is because you are not on the Electoral Roll and the lender is unable to verify your address. Make sure that you apply to have your name added to the records as soon as possible if you are not already on there as this should boost your rating immediately.

You should also consider cancelling any unused store cards or credit cards as these are taking up potential points on your score and will currently be included in your list of commitments and any loans or contracts that you already have should always be paid on time to avoid a default or late-payment being registered.

If you are unfortunate enough to get turned down then don’t keep applying until you have looked at the possible reasons for the refusal and when you are sure that everything is in order and a few weeks or months have passed, you may well get a better outcome next time around.


Alex Lawson navigates the complicated roads of money management as a financial counselor. He often blogs about ways of making smart money decisions for the everyday person.





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