I’ve been declined for a credit card and don’t know why
Your One Minute Response...
1Each credit company or lender has its own way of deciding if they are willing to accept you for credit – Rejection could be as a result of one or more of the reasons listed below.
2If you check your credit report you may see something which may have stopped a lender from accepting you.
3You may have had problems managing your credit in the past which has had an adverse effect on your credit record. These could include missed payments, CCJs or even bankruptcy.
4You might not be on the electoral roll and the lender wasn’t able to verify your address.
5You might not be able to prove a regular or high enough income for the lender you approached.
What to do if you’ve been refused credit
The first step is to try to find out why you were turned down. Every lender has their own system for identifying who they will and will not accept for a credit card. This list may help explain why this has happened.
Common reasons for credit refusal are:
- You may have a County Court Judgement (CCJ) against you.
- You have been declared bankrupt.
- You are unable to prove a regular or high enough salary. This may suggest to the lender that you can’t afford the credit you’re applying for.
- You have been late in making payments or missed them altogether on existing credit agreements. This will be noted on your record.
- If you’ve moved home recently or changed addresses frequently, the lender may not be able to verify the address details you’ve given them.
- Similarly if you have not registered to appear on the electoral roll, this could cause you problems as lenders won’t be able to find you.
- You may also have made multiple applications when you were turned down by one lender but decided to try your luck with another lender straight away. This can be damaging to your credit score. Every time you make an application for credit, a credit search is conducted by the potential lender and this search is recorded as part of your credit report.
- You may have been the victim of identity theft. Someone may have used your personal details to obtain credit cards using your name.
You may be able to find out why you’ve been refused credit by checking your Credit Report. For more information on how to do this, go to the ‘Checking My Credit Record’ section. Your Credit Report will show you the information that lenders can see when they check your Credit Record If the information is wrong you can demand that it is changed or removed
You can check your own credit file as often as you like, but any third party doing the same will leave a record of that search.
If you have applied for a number of cards recently, your credit rating will suffer. So stop applying for cards for 3 to 6 months to give you time to repair your credit rating. In the meantime, continue paying your bills and making your repayments on time, stay within your credit limits and your credit rating will start to recover.
Poor Credit History
If you have a poor credit history this section is full of advice and tips to help you improve and build your credit rating.
When you have a poor credit history, it can be difficult and frustrating to try and get a credit card or any other type of loan. It’s a vicious circle if companies are unwilling to give you credit, how can you establish a better credit history if nobody is willing to give you any credit so you can start building a better credit history?
Put simply, it’ll take time. There are no shortcuts or tricks that can take you from a poor credit rating to a high credit score in a matter of months. Realistically, it could take you up to a year or longer, depending on how well you manage your money during that time. Your Credit Score is based on a number of factors such as payment history over time and length of time you’ve had credit. It is important to re-establish a new and improved credit history and even more important to take the time to do the right things to maintain a good credit rating.
Here are some simple ways to improve your Credit Score:
- Pay your bills and make any repayments on time. This applies to all monthly bills such as gas, electricity, mobile phone contracts, catalogue or other accounts. Some of these on time payments will be reported to the Credit Reference Agencies, helping you build a good Credit Record.
- Remember to leave time for your payment to reach its destination. Postal payments can often take 5 or more days while online payments will often be significantly faster. Make a note in your diary or calendar for the day on which you need to make the payment so that you don’t forget!
- Pay at least the minimum repayment stated on your monthly bill. If you can’t remember how much this is, then check! It’s far better to overpay than to underpay, as an underpayment may be reported to the Credit Reference Agency as a non payment. This will not help you build a good Credit Record!
- Stay within any credit limits that you may have. If you exceed your credit limit then that too will be noted on your Credit File and will damage your Credit Record.
- Register on the Electoral Roll. Even if you are not a UK citizen and are not allowed to vote in all elections, registering on the Electoral Roll will help lenders find you and will improve your Credit Record.
Other tips for improving poor credit
If you have had a long relationship with you bank, approach them first to see if they can help you get a credit card. They should know you and your existing banking relationship may carry some weight when it comes to seeking credit.
If you’ve moved to the UK from abroad, find out if your old bank has any branches in the UK and whether it issues credit cards here. Again, they may consider you for a credit card if you have a good credit record with them in another country.
When evaluating your credit application, lenders will consider how often you move and whether you rent or own your home. Having an electricity, gas, telephone, cable, or water bill in your name also helps. Just having your name on these accounts won’t establish a Credit Score, but it can be helpful for first-time borrowers in establishing a track record of regular payment, especially if you pay by monthly Direct Debit. Your employment history is also significant as lenders want to see if you are able to hold down a job or if there are periods of unemployment.
What if none of these prove successful? How can I get the credit I need?
Sometimes none of these routes proves successful. In that case, there are providers that offer credit cards that take account of the fact that you have a poor credit history. These cards can help you establish and build your credit rating over time by demonstrating that you can successfully manage credit. In due course, you’ll then be able to apply for ‘Regular’ credit cards. Although acceptance can never be guaranteed you do stand a much better chance of success with these 'No Credit History Credit Cards'. They do charge higher interest rates (usually between 29.9% and 59.9% APR) and the credit limit may be lower than ‘Regular’ cards. However, a higher APR and slightly lower credit limit is probably worth it for a credit card that will help you establish a sound credit history and allow you to get much easier access to credit in the future.
- Check your credit rating
- Pay all your bills on time
- Stay within your credit limits
- Register on the electoral roll
- Never give false details on applications