Have you applied for a loan or credit and then been rejected or refused? Do you suspect, that you might be, if you were to seek car finance?
There are now ways to check your credit rating and the information that is kept about you. If it isn’t correct you can have it amended, and if it is correct, there are avenues to help you.
Lenders have to be reassured that the people they lend to, have and will be able to repay any type of loan or form of credit. There are initially two basic methods they use to evaluate your credit rating.
They will have to work out your credit score, which is usually done, by answering a series of questions either in person, over the phone or when completing an application form.
They will use a ‘credit reference agency’ to examine your ‘credit score.
How do they Credit Score
When you approach the lender, they have set criteria on what information they require from you. You will be asked to provide particulars on the following:
Your salary and income details
What your expenses are – This could be utility bills, mortgage or any other type of commitments. For example child maintenance payments
What you own and value of other assets IE House, holiday home
Additional loans IE Car, kitchen, conservatory etc
After providing the above details a numerical is score is given, if it is high enough you will qualify and if it is low, they could give you a number of options:
Decline the loan
The lender may reduce the amount of the loan
Interest may be charged at a higher rate
As a rule, the lender will not divulge there reasons why you have been refused the loan, but if asked are usually willing to give you an idea.
You Could ask Them to Reconsider
If: There decision was only made by using a computerised credit scoring system
You can provide the lender with additional information that could alter their opinion
Going to More Than One Lender
This is an option, as lenders due use different scoring techniques. But every time you apply, this is documented on your credit file which is used by the credit reference agencies and multiple applications that are refused with have a detrimental effect on your credit history.
What are Credit Reference Agencies?
A Credit Reference Agency retains data referred to as ‘credit history’ on most of the adult population of the UK. The collated information is then used to help the lender evaluate the risk of lending to any specific individual; this can also prevent the risk of fraud. Experian, Equifax and Callcredit are the leading agencies.
The sources of information used to calculate your credit history mainly comes from:
The electoral register.
They check whether you have any CCJ’s (County Court Judgements).
Any order for bankruptcy that may have been made against you.
Lenders, past and present to check on the repayment history.
Repossession of any properties
Your Credit File
The law says you can check and see what’s on your own credit file, by sending a small fee by post and also online which may be more. You cannot prevent a lender from checking your credit file.
Removing Incorrect Information
Get in touch with the credit reference agency direct to help you remove any incorrect information. You are entitled to do this under the Data Protection Act of 1998.
Be aware the FSA (Financial Services Authority) has issued warning against using companies that call themselves a ‘commercial credit repair company’ which offer the removal of information from your credit file to in effect ‘wipe it clean’.
When your Identity has Been Stolen
If you have applied for finance or a loan and been rejected, under circumstances where you have missed payments on a loan, you know doesn’t exist, you could be the victim of identity theft. Meaning another person has been using your details to obtain credit cards and, or loans. If you suspect this is the case, contact your local Police. You can also obtain additional information from:
Have you been Refused Credit?
Free help and advice is available for people that are in debt or been refused credit, they can also help provide ways to plan yourself out of debt, have a look at:
National Debt Helpline 0808 808 4000 or online
The Consumer Credit Counselling Service 0800 138 1111 or online
Community Legal Advice (CLA) 0845 345 4345
Citizens Advice Bureau – To find out your local office go to:
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