Having a credit application denied is never easy, especially when it was for something important. This could have been for an urgent expense or everyday needs, and having to deal with the financial uncertainty and the inability to get credit can be difficult. You shouldn’t despair, however. Instead, you need to get at the root of the issue and see what you can do to correct the situation. Let’s take a look at a few things you can do if your credit application was denied.
Know Exactly why you Were Rejected
The first thing you have to do is check exactly why your application didn’t go through. This will be essential if you want to make corrections or avoid making the mistake that got you rejected again. Sometimes, it could simply be because you missed some important information. Or maybe you don’t have sufficient history.
The best way to truly know is to get a copy of your credit report. All major credit report bureaus are required to give you one copy of your credit report per year for £2, so make sure that you get yours right away and start analysing it. Check for any inconsistencies. If you don’t see anything wrong and that you have a strong credit score, it might be because you have a poor credit history.
Fix or Establish Your Credit
In the case that you have an insufficient credit history, you’ll have no choice but to establish it. If you only have one card right now, you should consider getting another one. Secured credit cards would be a great option in this case since they’re almost guaranteed and will allow you to boost your credit with minimal risk.
Secured credit cards will usually require that you make an initial deposit that will serve as collateral and will be the set limit for your card. One of the things that is great about those cards is that you can ask for the limit to be increased or the card converted into a regular credit card after a while.
Keep Your Applications to a Minimum
You have to be careful with the type of account you decide to apply for. This is why we specifically mentioned secured credit cards and not just any type of credit card. From now on, you want every one of your applications to count or not trigger a direct inquiry on your credit report. Each inquiry sends a signal that you may be in desperate need of cash, which is never a good thing.
Instead, you want to go for those you feel almost certain of getting or those that won’t trigger inquiries at all. If it’s for an emergency, a service like New Horizons could help. They offer installment loans based on income and not your credit score, so you don’t have to worry about them conducting a credit check. They will connect you with a variety of lenders, many of them catering to those with poor or bad credit. The lender will then soft search your credit score, meaning you can apply without risking further damage to your credit score. You’ll get a chance to find the best deal without having to shop around and trigger additional and potentially harmful searches on your report.
Look at Credit Unions
Whether you have debt issues or not, having an account with a credit union could be a great idea. Credit unions are not-for-profit organisations that help people belonging to certain communities or share a specific bond, i.e. working for the same employer.
These will usually have less stringent terms. However, loans aren’t guaranteed, and you’ll usually have to save above a certain amount for a set period before you’re eligible to apply.
Sign Up with Credit Agencies
Another thing you need to do from now on is keeping a close eye on your credit score. Credit agencies will have services you can subscribe to that will send you alerts whenever there are fluctuations in your credit score. This will allow you to check instantly if you’re making progress, but also check if there is any suspicious or erroneous activity being reported.
Change Your Habits
You might also want to review some of your spending habits and get around to drafting an actual budget. Doing so with a clear purpose of paying back debt will help you in the long run.
This is also the time to start speaking with those you have open accounts with and see if you can strike a deal with them. Once you’ve done so, make sure that to get their agreement in writing that the entry will be erased from your report once it’s settled. From then, you can start focusing on rebuilding your credit and reapplying with confidence later on.
These are all things that you can do if your recent loan application was rejected. Whatever you do, never give up, and always try to find ways to make yourself more attractive to lenders by improving your signals and habits.