Get the loan you want
There are many factors that will ultimately affect whether or not you will be accepted for a loan. Here’s a quick guide to understanding the things that might result in your application being declined, and the things you can do to improve your chances of getting the loan you want.
Check your credit file
There are two major credit reporting agencies in the UK, Experian and Equifax. For a small fee you can have access to your credit file, and see the information that is held on you. Lenders will assess your credit file when considering your loan application, so it’s in your best interests to know exactly what’s on there. Make sure your credit history is correct and that your details are up-to-date. Also make sure there have been no false applications made in your name. Follow up any problems with the parties involved. Also make sure your details are on the electoral register.
Assess your current available credit
New applications for credit will be judged in relation to your current debt commitments. If you have a large amount of available credit in the form of credit cards, or a large amount of existing debt, this can have a negative effect on your chances of being accepted for a new loan. Also make sure you are applying for a loan of a realistic size in relation to your existing debts and income. Applying to borrow a large amount of money when you already have large unsecured debts is going to reduce your chances of being accepted.
Go with the best product
The lower the headline APR on a loan product, the less likely you are to be accepted – especially if you have a less than perfect credit rating. The typical APR on a loan is the interest rate that the lender must offer to 66% or more of applicants. As a low APR is more appealing to potential borrowers, lenders protect this rate by only accepting applicants with the very best credit ratings. If your credit rating is not perfect, consider applying for a loan that has a slightly higher APR, as these products will have less stringent qualifying criterion. This will also help you avoid the rejection spiral, as recent rejections on your credit file will reduce your chances of being accepted by future lenders.
Time your application right
If you have recently changed employers or moved house you may be less likely to be accepted for a new loan. The same goes for recent credit applications; lenders like to see that you are making conservative applications for credit, rather than applying left-right-and-centre for new loans. Time your applications right by spending time building up your credit rating by making payments on time and in full over a substantial period of time, and try not to apply for credit more than once every six months.
Please note: this website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research. For more please refer to our terms and conditions of use.