Being turned down when you apply for a loan, credit card or any other financing agreement (such as a mobile phone contract), can be deeply unpleasant. Along with the difficulty of not having the money you needed, there can also be a stressful sense of insecurity about your financial situation.
Find out why
If you’ve been turned down for a credit card, there may be a simple explanation why. You may have applied for a card that requires a perfect credit score, and if you’d chosen a different option, you may have been approved. The first thing to do is find out why you’ve been turned down from the lender.
You’ll also need to find out what your credit score is, and luckily some of the main credit check agencies offer a month’s free trial. However, you have to give them your bank details, so set a reminder on your phone to cancel before the free trial period runs out.
Don’t just reapply
If your credit score isn’t too bad, you may be tempted to reapply for a credit card or loan with a different provider. This isn’t always the best idea at this point, as repeatedly applying for credit will have a negative effect on your credit score.
Take an honest look at your situation
If you want a loan to buy a bigger car, that’s one thing - and hanging on a little while longer and building up some savings so that you need to borrow less shouldn’t be too stressful. But if you were trying to get a loan or credit card in order to meet the mortgage payments or to cover living expenses, that’s a more serious situation.
If you’re looking for some advice, it may be worth contacting one of the free debt advice services - the Money Advice Service is a great starting point online. There may be options you can take such as taking a mortgage ‘holiday’ at a time of reduced cash-flow, rather than taking out credit.
If you’re seeking credit because of difficulty making regular repayments, you should think very carefully before taking out a pay-day loan or similar arrangement. These have enormous rates of interest and you can end up getting much deeper into debt.
Improving your credit score – and your situation
If you don’t already, this is the time to start budgeting – make a list of your monthly income and outgoings, and look at where you may be spending too much. There are all sorts of ways of cutting your costs – using vouchers, taking leftovers to work for lunch, walking instead of taking the bus… and if you start now, you should be seeing an improvement in your bank balance as well as your credit score in no time.