Most of us will need loans at various times in our lives. It could be buying a home, financing a car, borrowing to upgrade a kitchen or go on holiday, a career development loan or a short ‘tide-you-over’ payday loan – there are many occasions when a loan can be useful.
But for some people, getting a loan isn’t that easy, particularly in today’s difficult economic climate when lenders are clamping down on extending finance. This means that you need to get your credit report if you’re struggling to get credit, to find out where the problems are coming from.
Common Reasons for Refusal
Your credit report is based on a large range of factors, primarily influenced by your previous ability to handle credit. A large proportion of your score is based on whether you’ve met your payments for existing or prior loans and credit cards. If you have paid late – or even worse, missed payments – it will affect your score.
Other things that can seriously damage your credit worthiness include having a CCJ against you, particularly an unsettled one, or having been made bankrupt. Not being registered on the electoral roll, moving house frequently and having made a large number of credit applications in a recent space of time can also play a part. Bear in mind that credit record checks all count on your file, even if you don’t take out take out a loan.
How to Correct Faults
Contact one of the credit agencies such as Equifax, Experian or Call Credit to get your credit report. You can do this online, or speak to your citizen’s advice bureau for details about how to make postal applications. A small charge will have to be paid.
When you receive it, you can submit a note if you find any inaccuracies, or you wish to provide further explanation to help improve a poor-looking situation. Some lenders will take these notes into account when making their decisions about granting further credit.
Rebuilding your Credit Score
When you’ve got your credit report, you have a great source of information and a base to start from. Take steps to rebuild it if it’s poor, before applying for more credit. Firstly, stick to your repayments faithfully – don’t miss them or pay late. Pay off some of your debts.
If this isn’t possible and you’re applying for a loan out of desperation, it’s time to speak to a debt advisor (ideally government or charity based) to look at the options available to you, which may include an IVA or debt repayment plan, rather than looking to take on more credit to pay off existing debts.
Look at options to increase your income to pay off debts – work overtime, get a second job or sell unwanted items on eBay. Contact the council to put your name on the electoral register. Remain at one residence for at least six months while you’re cleaning up your credit record.
Don’t make any applications or further searches until you’re confident that your debt situation is under control. You may also want to speak to a debt advisor for further help on prioritising your debts and finding better ways of managing them.
