If you apply for a loan and you are unsuccessful, or you find that you’re struggling to get credit from traditional lenders, then it’s important to note that there are still things you can do to access the finances that you need.
Crucially, it’s also worth noting that there are some things you will need do avoid that could potentially make it more difficult for you to access the credit that you want in the future. Following, we will look at what it means if you are refused a loan or credit, and what you can do in terms of alternative borrowing options.
Being Refused a Loan or Credit
When you are refused credit or a loan by a lender, the company that you attempted to get finance from should give you an explanation of why you were not given the loan. In most cases the problem will be down to bad credit or a bad credit history. If you are turned down because of your credit, your lender should tell you which of the credit agencies available they used to find the information that they got about you.
In some cases you will be able to ask why you didn’t get the loan, but remember that the lender will not have to offer much of a detailed answer. However, remember that mistakes can happen with credit reports, and if you spot a mistake you will need to write to the credit agency and ask them to correct it as quickly as possible. Keep in mind that you will need to offer an explanation as to why something is wrong, and include all the evidence you might have.
When you inform a credit checking agency about a mistake that they have made on your account, that agency will be given a total of 28 days to act and rectify the problem. During that time the detail that is wrong within your file will be marked as disputed while it is further investigated.
Don’t Just Continue to Apply
One very important thing to remember when you are applying for credit and you have been refused, is that you should never continue applying for more credit and constantly continue to get refused. The more you attempt to apply for credit, the more those attempts will show up on your credit file, regardless of whether you are successful in getting the financial assistance that you have asked for or not.
Several applications for credit in a small amount of time will show lenders that you are desperate for cash, and in some scenarios, you might find that your credit rating is damaged even further. This could also have an impact on the interest rate that you are charged at a later stage when you are successful in applying for credit.
If you are turned down for a credit card or loan, then this might be the perfect opportunity to start thinking more carefully about your current financial situation. If you already have debts in place that you cannot fully repay, then you may need to speak to a professional about budgeting options. There are various organisations across the UK that offer confidential and free budgeting advice.
What to Do Next
What you should do next when you are refused credit will depend largely on why you are applying for money in the first place. For example, if you are looking to borrow money because you want to pay off other debts, or because you need help in paying for your current bills and living expenses at the end of the month, then you should consider taking to a free debt advisor as quickly as possible. These professionals will help you to come up with a strategy that should help to prevent you from getting deeper into debt.
If you are looking to fund purchases for items that you need and you know that you can afford the repayments that will be expected, then you will need to look at your credit rating. You can do this by checking your credit report. You can see your report by subscribing to a service or buying a single report.
Considering Credit Unions
If you have particularly bad credit, or you are struggling to get low interest rates elsewhere, then you might be able to borrow from a credit union. Credit unions are a form of non-profit organization that has been set up to assist people within a specific community. There is a cap in place on the amount of interest that a credit union can charge on their loans, and there are no hidden penalties or charges to worry about either.
Of course, in most circumstances you will need to be a member of the credit union in question to get access to loans, and some will require you to have some savings with them.