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Have You Been Rejected for a Loan? Here are Your Next Steps

Being rejected for credit can be a huge set back, particularly if it was for something critical in your life like a car or a mortgage. It can be humiliating, and even shocking if you weren’t aware that there were major problems with your profile.

The most important thing at this stage is to not panic, but instead to work out a plan of action before you reapply.

You should typically wait 4 months before you apply again for credit. This means that there won’t be too many traces on your profile (left when companies search it to assess you as a borrower) and it also gives you sufficient time to correct or improve most problems.

Checking your file needs to be your first step. You can’t start to fix problems unless you know what they are, and fortunately you can check your file for free.

Start by checking that all the information on your profile is correct and up to date. Sometimes there can be outdated information which is holding you back, for example if a loan is still marked as outstanding when you’ve paid it off, or if you have resolved any bankruptcies but they’re still showing on your profile.

These errors can cause slight red marks on your history or they can cause you to be rejected outright. Either way, they’re going to cost you money, which is unfair if they’re inaccurate.

Some common smaller errors include you not having updated your address with all the companies you have accounts or bills with, which fortunately is easily fixable.

You might find that companies you’ve borrowed money from haven’t updated your profile either. They might have outstanding bills or defaults listed still on your history even though you’ve paid them off. Again, this is easily fixable. You simply contact the lender and ask them to update your file.

Most lenders will be happy to comply, but if you struggle to get a response from them, or you’re unlucky enough to have dealt with a company who now no longer exists and your debt has been sold on, you might need to enlist help from a specialist to help you fix your profile.

You’re more likely to be rejected if you have serious problems in your history. If you have borrowed a lot in the past and failed to manage it well, lenders will be reluctant to entrust you with more money, so you need to set about making yourself a more attractive candidate.

This will probably involve working out a payment plan to reduce your debt and make up for any missed payments. This might be difficult if you’re struggling, but there are professional advisors who can help you.

If possible, you should consolidate your debts into one loan or credit card with the lowest interest rate you can get. If you can’t do this, focus on paying off more on the ones with high interest and prioritise the ones with defaulted payments, as these will be hurting your credit profile and costing you money.

If you get yourself organised, make sure your profile is up to date and correct and focus on reducing you debt, you’ll have a much better chance of being accepted when you re-apply for credit in 4 months time.

This infographic shows you all the tips for improving your credit:

Source: http://www.carloan4u.co.uk/infographics/how-to-exorcise-your-credit-demons.html

Originally posted 2013-10-02 17:51:08.

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