Worried about your credit card application being rejected?
Follow our top tips to give yourself the best chance of being accepted.
As the effects of the credit crunch linger on, lenders are continuing to tighten their criteria.
This means getting approved for credit can be quite a challenge.
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The Capital One Credit Card strengthens your credit rating. Apply online for a instant decision. |
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Representative Example: 34.9% APR representative (variable).
Based on a credit limit of £1,200 and a purchase rate of 34.9% p.a. (variable).
Capital One, Trent House, Station Street, Nottingham, NG2 3HX
Based on a credit limit of £1,200 and a purchase rate of 34.9% p.a. (variable).
Capital One, Trent House, Station Street, Nottingham, NG2 3HX
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Financial firms have a duty to lend responsibly, to take reasonable steps to ensure that people will be able to pay back what they borrow. However, despite having a regular income and good credit history, some people are now finding their applications rejected.
In the current financial climate, it is more important than ever to know what makes you attractive to lenders and how you can avoid rejection.
Our top tips are designed to give you the best chance of being approved for credit.
Check your credit report
Improve your credit rating
Fill in the application carefully
Apply selectively
Improve your credit rating
Fill in the application carefully
Apply selectively
1. Check your credit report
The most important thing you can do before you apply for any type of credit - including credit cards, loans and mortgages - is check your credit report. This is what a lender will look at when deciding whether to approve your application for credit, so it’s essential you know what it contains.
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In the UK there are three credit reference agencies - Equifax (www.equifax.co.uk), Experian (www.experian.co.uk) and Callcredit (www.callcreditcheck.com) - all of whom collect information about you and share it with banks and other lenders. Different lenders will use different agencies to access information.
You can check your credit rating with each of these agencies online by visiting their respective websites. You could also write to them and ask for your file for a £2 fee, but while this is cheaper than an online check it will take a lot longer.
Alternatively, for £19.99 you can check all three reports in one go, with the Multi Agency Report from Check My File (www.checkmyfile.co.uk).
2. Improve your credit rating
You can check your credit rating with each of these agencies online by visiting their respective websites. You could also write to them and ask for your file for a £2 fee, but while this is cheaper than an online check it will take a lot longer.
Alternatively, for £19.99 you can check all three reports in one go, with the Multi Agency Report from Check My File (www.checkmyfile.co.uk).
2. Improve your credit rating
Once you have your credit reports, you will be able to see how good or bad your current rating is.
First things first - make sure the reports are correct. If you spot any mistakes or see any accounts listed that have been cleared or cancelled, it’s important to contact the credit agency immediately and correct any information that’s inaccurate or just plain wrong.
If there are amendments to be made, and if the agency agrees with them, they should be made quickly, though sometimes you will need to talk to the company that originally filed the information.
Occasionally a credit agency may refuse to amend your file - in this case you are entitled to add your own comments as a “notice of correction”. These extra comments may mean your credit applications take longer to process, but your explanations may also help you to get better deals.
As well as ensuring there are no mistakes on your credit report, there are plenty of other ways you can improve it, including:
Cancel old or unused credit cards - Don’t just cut up old cards and forget about them - call up your provider and ensure that your account is closed. Then give the credit ratings agencies a call to check it has been removed from your fileGet utility bills in your name - This shows that you have a fixed addressPay your existing bills on time - This doesn’t just apply to credit cards or loans, but also gas, electricity and phone bills, as these are all types of credit. Use direct debit whenever possible to ensure you don’t miss any paymentsMake sure you are on the electoral roll - If lenders can find you on the electoral register, this will improve your credit rating
3. Fill in the application form carefully
Application forms provide lenders with a lot of personal information they need about you, including your age, address, marital status and salary. It’s important to take time to fill in your application form and double-check it before you submit it, as mistakes or discrepancies on the form could affect your chances of being approved.
4. Apply selectively
4. Apply selectively
If you need credit, it’s important that you don’t apply for lots of products in a small space of time. This will make you look desperate, or possibly even fraudulent, and will damage your credit rating.
Pick the products you apply for carefully and, if you need to make multiple applications, ensure there is a decent interval between each one.
When choosing which credit cards to apply for, the chief considerations are always the annual percentage rate (APR) as well as any 0% balance or purchase deals and special offers.
Pick the products you apply for carefully and, if you need to make multiple applications, ensure there is a decent interval between each one.
When choosing which credit cards to apply for, the chief considerations are always the annual percentage rate (APR) as well as any 0% balance or purchase deals and special offers.
However, if you want to improve your chances of being approved, there are a couple more things to think about:
Your bank knows you - If you have a good history with a particular bank - for example if you have held a current account that’s in credit for some years, and they can see you have regular incomings - they may be more likely to approve your application for credit. So if your current bank offers competitive deals, this may be a good place to start.
Having said that, data protection laws limit the amount of information that different groups within a company can share with each other, so the credit department may not necessarily have access to details of the other products you have within the same bank.
Different banks use different credit rating agencies - Different lenders use different combinations of reports from the three main credit ratings agencies. If you know what is on each of your credit reports, you could adapt your applications and apply to lenders that you know will check your best-looking report. Check out the table in the FasanoFinance.co.uk credit rating agencies guide, which shows which ratings agencies lenders use.It’s also worth bearing in mind that, while you don’t want to look like you’re inundated with credit, having some kind of credit and managing it properly shows you can cope with credit and are reliable, while having no credit history at all can be detrimental to your application.
So, above all else, the secret of establishing a good credit rating is to be careful about what you borrow and make sure you pay it back.
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