My Loan Was Declined

My Loan Was Declined

My Loan Was Declined


There could be many reasons why your loan application was declined. Working out why is vital to give your future applications the best chance of being accepted.


Understand why your loan application was declined

Before taking action, you need to know why your loan application was rejected.

Poor credit rating

One of the most common reasons for being denied credit is having a poor credit score.

When you apply for a loan, lenders will check your credit file to help them make a decision. Loan providers use your credit file to predict how you are likely to behave in the future.

If you have had finance in the past and delayed repayments, this could affect your credit score. As could being financially linked to someone with a poor credit history.

Having too many ‘footprints’ or hard searches on your file over a short period of time, may also have an effect. If your credit history is less than perfect, you may struggle to get finance.

No credit history

Having no credit history at all, could affect whether a loan provider is willing to lend you money. This is because they have no past behavior with which to predict your future actions.

Failed affordability check

Responsible lenders carry out affordability checks. These are to ensure you can afford to repay your loan. If a provider decides you will not be able to afford the repayments, your application may be rejected.

Not being on the electoral roll

If you are not registered to vote, it can be much more difficult to be approved for finance. If you have not already done so, head to the government website to apply to be on the electoral roll.

Immediate strategies

There are many steps to improve your credit rating:

  • 1

    Check your credit file to ensure there are no mistakes which could be harming your credit rating

  • 2

    Register to vote

  • 3

    Check you are not financially liked to an old partner or flat mate. This could be through a joint bank account, a joint loan, a joint mortgage and even utility bills

  • 4

    Avoid unnecessary hard searches or ‘footprints’ on your credit file. Instead, eligibility calculators to check if you could be accepted before applying

  • 5

    Ensure your address is up to date. An old address on an open account could mean a rejected application

  • 6

    Stop withdrawing cash on credit cards - this could be seen as a sign you cannot manage your money

  • 7

    Change your regular bills to direct debit. Forgetting a payment could harm your credit score.

Long-term strategies to improve or rebuild your credit history

It can take time build a good financial history to show lenders you are a responsible borrower.

Over the next few months, it may improve your credit score if you:

  • 1

    Utilise a credit rebuild card. This is a credit card which rebuilds credit if you use it and pay it off in full every month.

  • 2

    Draw up a budget and look for areas where you can cut costs.

  • 3

    Check your credit files for errors on an annual basis.

Alternatives to personal loans

There are many alternative forms of finance available including:

  • 1

    Credit cards

  • 2

    Bank overdrafts

  • 3

    Refinancing your mortgage

  • 4

    Credit unions

How right they are for you will depend on your personal circumstances.

Taking control of your finances and rebuilding credit, can help to improve your chances of being accepted for credit in the future. Most importantly, never borrow more than you can comfortably afford to pay back.