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Why has
my application for credit been turned down?
When you apply
for credit, a lender will look into your credit
history by contacting a credit
reference agency. If there is evidence
that you have failed to repay your debts in
the past, this will affect your chances of
getting a loan or credit card. Late payments,
Default notices, County Court Judgments and
Repossession Orders may all result in a refusal.
Lenders will
also take into consideration the debts you
have already and compare this to your income.
If they believe you have insufficient funds
to repay the loan, again they will turn down
your application.
Sometimes,
if you have been "shopping around"
for credit, there will be a number of searches
recorded on your credit reference file. In
some cases this may be sufficient reason for
lenders to refuse to grant you any further
credit even though you may have no intention
of taking up all the offers. The best way
to avoid this is to compare companies by rates
and quotations without actually going through
a full application with each one.
Lenders should
give you an indication of the reasons for
refusing you credit.
When this
happens it may be tempting to turn to a credit
repair agency. This is very unlikely to be
a good idea and in some cases may make your
situation worse.
I have
seen an advert for a "credit repair"
company. What do they do?
Claims made
by credit repair companies that you can have
County Court Judgments or any other records
removed are false - this can only be done
if they were incorrectly registered or if
the action against you has been discharged.
There are
legitimate ways in which Judgments can be
set aside - for instance if the sum is paid
within a month of Judgment or if a person
genuinely has not received the relevant summons.
Information on what to do in these circumstances
is available free from the county court.
In a report
published in May 2000, the Office of Fair
Trading warned against relying on credit repair
companies and suggested that some such companies
are simply fronts for a lender or broker trying
to sell you a loan. Credit repair companies
are unable to do anything that you could not
do yourself.
What to
do if you think your credit reference contains
incorrect information.
A credit reference
agency must investigate your claim that the
record is incorrect. If you believe there
are incorrect entries, contact the agency
immediately and try and give as much proof
as possible in order to back up your argument.
For example, send copies of any correspondence
you had with that lender. If you believe a
CCJ
has been incorrectly registered, contact your
local County Court.
If the
lender believes you would be unable to repay
the credit agreement:
Lenders will
look at your current income and expenditure
and make a judgment as to whether you can
afford repayments on a loan. If they feel
that you have insufficient funds to do so
it may be time to evaluate your situation.
Once you have been refused credit on these
grounds you have few options left.
If you feel
that your monthly outgoings are high due to
existing debts, taking out more credit is
not the answer. Rather than borrowing from
Peter to pay Paul, address your financial
situation. Complete
an INCOME AND EXPENDITURE FORM in order
to help you assess whether or not you can
realistically manage to make the necessary
repayments. If you find that you cannot, then
seek help. If you continue to borrow money
you risk making matters worse so contact a
debt advice agency for free advice.
For further information
on Credit Repair contact one of the following:
Payplan - The Free Debt Advice Agency
Freephone 0800 917 7823
Email: help@payplan.com
Web: www.payplan.com
Citizens Advice Bureaux - www.nacab.org.uk
National Debtline - 0808 808 4000
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