Written by: Cally Worden
When the ‘Computer Says No’ being refused for credit or a loan it can feel like an irritation, or the end of the world, depending on your specific needs and circumstances at the time. If you’re wondering what you can do if refused for credit or a loan, and what alternative options there are, then read on …
Find Out Why you were Refused
If your application for a loan or credit card has been refused, then the company concerned should tell you why. If it was due to a search on your credit record, they should tell you which Credit Reference Agency they approached. Although you can ask for additional details about the refusal they are not obliged to offer a more detailed reply – ask anyway – you have nothing to lose.
Contact the Credit Reference Agency
Check out your credit rating with the relevant Reference Agency. Mistakes can happen, and if you feel all or part of your credit report is unfairly negative then do contact the Agency in writing and request that this be corrected. Be sure to back up your request with details of why you think their information is wrong, and be prepared to provide documentary evidence if they request it. Following your contact the Agency has 28 days in which to respond and act, and the details you are querying should be marked as ‘Disputed’ during this time.
What NOT to do
Following a refusal with one organisation it can be tempting to try your luck elsewhere. Don’t. Irrespective of refusal or acceptance, the simple act of applying for credit flags on your credit record. The more applications you make, the more desperate you look, and this can be damaging to your record. The level of your credit rating can determine how much you can borrow, whether you can obtain credit at all, and in some cases can even impact on the level of interest you may be charged.
What you CAN do
Applying for credit means usually means you need the money, and that need does not necessarily evaporate because your application has been refused. Instead of kicking out multiple fresh applications consider these alternative options:
- Credit Unions – these local community support groups offer affordable loans to those in need, although with some you may have to save for a given period of time before you are permitted to request credit
- Social Fund Loan – useful for urgent requirements, an interest-free Budgeting Loan from the Social Fund may be available in certain circumstances
- PayDay Loans – an expensive way to borrow, but can be useful if you are able to repay the amount swiftly and within the standard deadline
- Home Credit – also known as Doorstep Lending. This can be a very expensive way of borrowing, so make sure you are able to repay the full loan quickly. Only use a licensed lender to protect yourself from rogue loan sharks
- Pawnbrokers – will sometimes lend money provided you leave a valuable item as security. If you are unable to repay the loan the Pawnbroker keeps your item
- Cash For Gold – specialist gold merchants, postal gold websites, or online dealers will all offer you money for your gold, often on a price per gram basis. Remember that you cannot get your items back later if you change your mind, so always consider this option very carefully
People need to borrow money for a variety of reasons. If your request for credit or a loan was simply part of a long-term financial plan and you know that your financial circumstances are favourable then challenging the reasons for the refusal are crucial to your future financial health. If on the other hand you know that your financial situation is borderline, and the refusal came as no real surprise, then by all means challenge the refusal, but also consider obtaining some free debt advice that may help you manage your finances more effectively and remove an urgent need to borrow money in the future.