Turned Down For Credit? Here’s Why.
When the market was booming credit card companies and banks were pushing loans on people. They are now being fiercely criticised for being so careless.
Now that bad debt has spiralled banks have become more judicious about whom they will lend money to. Only those that have an excellent credit rate will receive the best deals on offer. This has come as a bit of a shock to the general public who are now being turned down for credit.
So why are people being turned down for credit.
Believe it or not, people who have never borrowed money before find it harder to obtain a loan. This is because banks and credit card companies use your credit history to gauge whether or not you will be reliable and trustworthy. Without this a lender cannot tell if you could pay the loan back on time or not. So even if they do accept a loan it will most probably be with a high interest rate.
A lot of people also don’t realise that every time they apply for a loan the lender does a search on their credit score, this leaves what they call a footprint. This means if you are applying for a loan with several companies it could look like you have taken on too much debt, even if you didn’t go ahead with the application. It can also be taken to mean that you are in desperate need of money, you have too much debt or even that you are using someone else’s identity.
If you have missed payments on loans in the past it will stay on your file for 3 years. If you have been made bankrupt it can remain on your file for 6 years. This means that even though you are in a good position to borrow money now lenders may look at your past records and put you as a high risk lender.