What to do if you can’t get Credit

Having in no small part contributed to the reckless spending culture in Britain, banks have now clamped down and are rejecting up to half of all applications for credit. As the cost of living continues to rise, the price of energy and food increases and and  the number of bad debtors, insolvencies and bankruptcies climbs, banks are now incredibly nervous about lending money to people.  Even as a good debtor you may find your credit card limit being reduced as banks become more jumpy.

If you apply for credit now your finances will be subject to much closer scrutiny than ever before as banks tighten up their lending policies. You may find yourself being routinely turned down for credit or not offered the headline interest rates being advertised. If this is the case then there are some things you can do to increase your attractiveness to prospective lenders.

Check your credit record

If you’re having difficulty getting credit today, it may be because you have missed credit repayments or exceeded your credit limit in the past. Alternatively, it may be because you apply for credit too often or even that a fraudster has acquired your personal financial information and is applying for credit in your name. The only way to find out is to check your credit files with a credit reference agency.

Avoid rate tarting too often

Rate tarts swap their debts from one 0 % credit card to another paying no interest as they go. By making use of 0% balance transfers and paying only minimum monthly repayments, rate tarts actually end up costing lenders money, sometimes hundreds of pounds at a time. Naturally, card issuers don’t like this game, so it’s become increasingly hard to be a rate tart, plus these firms have introduced transfer fees to recoup some of their losses. So, only ‘tart’ once or twice a year.

Find out why

If you are being turned down for credit then ask why. Lenders are wary about explaining their lending decisions in detail, but some will at least give you an indication as to why your application was rejected. Often, providing further information can tip the balance, causing a rejection to become an acceptance, so provide as much information about your personal financial situation as you can.

Boost your income

How much you can borrow is directly related to  how much you earn; the higher your income, the easier it is to borrow and the more debt you can run up. So, increasing income can boost your chances of obtaining credit.

Start Again

If you’ve never borrowed money or you’ve had problems with managing credit in the past, you may find it almost impossible to borrow from mainstream lenders. In this situation, you could establish or rebuild your credit history with a credit card aimed at beginners. These cards come with high interest rates, plus low credit limits, so it’s vital that you can be disciplined enough to only spend on them what you can afford and pay off your bill in full by monthly direct debit or standing order.

Close accounts that you no longer use

You may have paid off your credit cards off but don’t forget to close the accounts when you have otherwise they will appear on your credit file. If it appears that you have too much credit available to you it may be more difficult to obtain more.

Credit unions

Credit unions are community-based, not-for-profit co-operative financial institutions which are owned by, and operated for the benefit of, their members. There are credit unions all over the world, providing savings accounts and unsecured personal loans to individuals. As non-profit-making organisations, credit unions provide terrific financial help, especially to people on low incomes and those who have been rejected by high-street lenders.