IF you want to get a credit card, a loan, mobile phone contract or even pay for insurance monthly, you will have to be approved for credit.
And if you apply for it through Carol Beer – David Walliams’ unhelpful bank worker from TV series Little Britain – the answer is likely to be “computer says no”.
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Thankfully real-life lenders aren’t as uncooperative.
Nevertheless one in every 14 applicants gets turned down – and 60 per cent of them do not know why.
James Jones, of credit reference agency Experian, recommends asking the lender why if you get refused.
He says: “It may turn out to be something you can challenge – or it might help you take action to make sure future applications are more likely to succeed.”
We reveal some of the unfair reasons lenders can deny credit and what you can do to fight refusals.
1. Your address doesn’t match
WHEN you apply for credit, lenders will check your address against official records. If it does not match, you could get refused.This happened to one retired teacher who named her house “Rose Cottage”.
When she applied for a mobile phone contract she was told that she would only get it if she paid a huge deposit. After appealing, she discovered all her credit history was recorded under her house number, not Rose Cottage, so credit searches failed to find her.
She had to reapply with the correct address. So make sure you only apply for credit using your official address. You can check it at royalmail.com/find-a-postcode.
2. You’re still linked to an ex
IF you shared finances with an ex-partner, then joint accounts, loans or bills could affect your credit score.Lenders use these to decide whether you are a safe bet to loan money to. So if your ex misses a payment on a joint loan it could damage your rating – and any old joint accounts which are still open but not used can also negatively affect your score.
Alastair Douglas, of credit experts TotallyMoney, says: “Financial connections with an ex, such as a joint loan or mortgage, often hold people back. If the debt has been paid, it’s often best to close these accounts.”
High score knocked by divorce
AFTER a messy divorce, Rob Smith* moved house and registered anonymously on the electoral register for his safety.
But when the property advisor later tried to pay his £300 car insurance premium, his insurer the AA refused, saying there was an issue with his credit report.
Rob, 58, is calling on credit reference agencies to rethink how they assess people not on the electoral register.
He was confused because he had a high credit score of 971 out of 999 – which normally causes no problems.
Credit reference agency Experian explained his report showed he was “not registered on the electoral register”.
Some lenders will automatically deny credit to unregistered people as they see them as less reliable.
Rob, 58, from Wiltshire, says: “Anyone who is anonymous on electoral register could be refused credit when they most need it – and it could have catastrophic consequences.
“I think both lenders and credit reference agencies need to look at this flaw in the system.”
*Name has been changed to protect identity
3. There’s a mistake with a bill
MISTAKES with bills for water, gas, electric, broadband or mobile phones could affect your credit score without you even realising.If a company claims you still owe money at an old address, you may not receive letters about it and only find out about the problem when you apply for credit.
Admin errors can also cause problems, as one customer found out when he was refused a monthly dual fuel contract by an energy firm. The middle-aged man asked Experian to investigate and it discovered his former bank had incorrectly marked him as “deceased”, meaning that he failed a credit check.
Half of Brits have never checked their credit report, rising to nearly three quarters of under-25s, but keeping an eye on it can help you spot problems and deal with them before they become serious.
4. You don’t exist on the credit system
IF you have divorced or been widowed, you may have problems getting credit if you did not handle the bills Sandra Pickles failed a credit check when she tried to buy a mobile phone after splitting from her husband of 28 years.
The 58-year-old nurse, from Cheshire, had never missed a payment. But all of the couple’s bills and bank accounts had been in her ex-husband’s name, so Sandra was “invisible” to the credit search system.
Experian’s James Jones says: “People with no track record give lenders nothing to base a decision on and are unlikely to qualify for many products – at least not at competitive rates. Being ‘invisible’ can leave you with a similar credit score to someone who is in significant arrears or has defaulted.
How to tackle credit refusal
EXPERIAN’S James Jones give his three top tips . . .
- Make sure to check your credit report at least once a year. Register online with credit reference agencies such as Experian, Equifax or TransUnion to review any errors that may have been made.
- Use an online eligibility-checking tool. These will help you find out which firms are most likely to offer you credit before you apply. MoneySaving Expert’s credit card very helpful eligibility calculator will tell you which deals you have a chance of getting.
- If you get denied credit always ask why. Lenders might tell you what the problem is so you can act on it. If they don’t, Experian has a guide to help.
