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Loan Glossary: Refused Credit

Refused Credit

Credit is not a right! You have no absolute right to credit and lenders are not bound to offer credit to anyone who asks for it. However, there are some rules. You cannot legally be refused credit on grounds of race, gender, religion, sexual orientation or address.

Most of the time you should be able to borrow what you want provided you can demonstrate that you are in a position to afford the repayments. What if you are refused though? Being refused credit can come as a shock.

Lenders can legitimately refuse an application without giving any reason. However, most will give you some idea of why your application has failed and you are entitled to know whether the refusal is the result of credit scoring or information provided by a credit reference agency.

If you have recently been divorced, moved house or if you have simply just never required credit before, you are likely to have been turned down, simply because of the imperfections in the credit reference system. Many people are turned down for no reason other than they do not appear on the electoral register.

Just because one institution has turned you down does not mean that others will. Some lenders will only lend to individuals who have been employed for more than six months, thus even those with a perfect credit record may find themselves being refused if they have recently changed jobs. You may also be refused if your details do not fit the profile of people to whom that lender wishes to provide credit.

Do be aware, however, that if you have had problems with credit or loan repayments in the past, this could influence whether you are offered credit in the future and the rate of interest that you may be asked to pay.

Steer clear of credit repair companies that promise to remove county court judgments from a credit file. You may do this yourself by following guidance readily available from the county court.

Some credit repair companies also claim to be able to remove adverse credit account information. This is simply not true. Information may only be amended on a file by a credit reference agency under the direct instruction of the lender who has provided the adverse information in the first place.

See also: Financial Services