Finding out why you have had a loan refused

Having a loan refused can be worrying and confusing, especially if you have no idea why it has happened. It may help you to learn as much about the loan process as possible, so you can improve your chances of being approved for loans and other lines of credit in the future. When you apply for a loan, potential lenders have two ways of checking whether you are likely to pay it back. The first is your credit score, which is based on your answers to several questions relating to your finances. The second is your credit history, which is a brief overview of your past financial relationships. Everything you have borrowed and paid off in the last six years will be reflected in your history. Unfortunately, if you haven't paid for things, even utility bills or you have missed or late payments this will all be noted in the history as well.

There are three main credit agencies in the UK, Equifax, Experian and CallCredit. These hold information on everyone in the UK and they can give out your information to potential lenders when ever it is requested. Your credit history will also detail if you are on the electoral roll, if you have ever been bankrupt and details of any house repossessions. If you have a loan application refused, the first thing you should do is ask for a copy of your credit history from one of the main agencies. There is a small fee for this, which is usually no more than £5.

Requesting a copy of your credit file when you have had a loan refused allows you to check that the information held on you is up to date and most importantly, accurate. It is not uncommon for credit files to have mistakes on them, which, when pointed out can be rectified fairly quickly. If your credit history file is correct, you will need to attempt to clean it up before you apply for a loan again. This means trying to keep on top of payments and paying bills before the due date for at least six months.

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