Being declined isn’t a great feeling but don't panic, you're not alone.
Moving forward, there are definitely some things you should avoid, but also ways to improve your situation and chances of getting accepted. This article will help you understand:
- Why you’ve been declined
- What not to do
- Your options and next steps
1: Why was I declined?
If you’ve been declined for finance, your first aim should be to understand why. The provider you applied to should be able to give you the answers, or at least the details of the credit referencing agency they used. When providers decide whether to accept or decline you, they check the details on your application form against their own acceptance criteria. If you read and understand these criteria before you apply, you'll be much more likely to send off a successful application.
2: What should I not do?
If you’ve been refused finance... pause! Do not keep applying! From speaking to a number of our customers, there is a widely-held belief that if you fire off applications to every lender you can find, one is bound to say yes. This isn't true - it’s actually the worst thing you can do. Every time you apply, it shows up on your credit file - even if you’re not successful. Making lots of applications in a short space of time makes it look like you’re desperate for cash. This means you'll find it it increasingly difficult to get accepted and will affect the amount you can borrow and the interest rate you’ll be charged. If you can afford to wait a while, you'll get to borrow more cheaply. If you can't, make sure your find a lender which is likely to accept you, using the quick and free Choose Wisely Eligibility Checker.
3: How do I move forward with my application?
First step: understand your credit file - without knowing where you stand, how can you move forward? There are a number of free credit scoring companies out there such as Experian and Noddle. A favourite among the Choose Wisely team is ClearScore - it's free, simple and reallyeasy to use. For more information on understanding your credit file, along with how to manage and improve your credit score, check out the article below.
Next step: This depends on why you were looking for finance in the first place.
I’m borrowing to pay off other debt
Borrowing more is not the answer. If you are struggling with debt there a number of steps you can take to get back on track. All information on how to cope with debt and where to seek help can be found in our guide to borrowing with bad credit.
I have bad credit, but I can afford the repayments
If you have a poor financial past but you're confident that you’re now on a firm financial footing, you have a number of bad credit options you can consider. A good start is to complete a personalised loan eligibility checker. This is free, won’t affect your credit file and will provide you with suitable options to compare based on your circumstances.
Your greatest chance of acceptance is likely to be if you can find a guarantor. Be aware that guarantor loans are for a very specific set of circumstances and do come with a warning.
Credit cards for borrowers with bad credit
A credit card can be a great alternative to a high-cost short-term loan. If you're disciplined with your repayments, a credit card is often a cheaper and more flexible way of borrowing in the short-term, in comparison to a payday loan.
Lenders of last resort
High-cost short-term loans, home credit and pawnbrokers all fall under this category. Careful consideration should be taken before going down this route.
If you’ve been declined for finance don’t panic. Being declined doesn’t mean your chances of obtaining finance are over. You do have options but it is vital you continue with your search extremely carefully - applying to every provider you can find won’t get you accepted and will harm your credit file. Take the time to compare your options. A great place to start is with a Choose Wisely Eligibility Checker. It’s free, won’t impact your credit file and will provide you with a list to lenders to compare.