No-one likes rejections, but it’s especially frustrating when, you need a loan, mortgage, credit card, or even just a mobile phone, and the lender responds “computer says no.”
We take a look at some of the top reasons for rejection. these cover both personal and business applications
Not being on the electoral role
This one is huge. Lenders use electoral role data to confirm the identity of applicants. If you’re not listed at your current address then it’s near certain that any applications you make will at best be delayed, or at worst outright rejected.
To register visit the Register to Vote page and make an online application. It only takes about 10 minutes complete, and could save you a lot of hassle in the future.
Lenders, or at least there computer systems anyway, are neither smart nor intuitive. It’s important to make sure that the details your list on the application match perfectly with your identification documents and the electoral role. That includes middle names, confirmation names, and addresses. Even small discrepancies can have a big impact. For example, writing your address as 10 Woburn Court, instead of 10 Woburn Court House (as it might appear on the electoral role), would likely lead to delays and further requests for documentation. Don’t ask me how I know.
In a letter to the Telegraph a reader who already had a current account with Santander, was turned down for a credit card due to discrepancies in her address. http://www.telegraph.co.uk/journalists/jessica-gorst-williams/12164890/Why-was-I-refused-a-Santander-credit-card.html
Too many applications
Making too many application in a short space of time is setting yourself up for failure. It makes you look desperate and therefore more of a risk to lenders. The top advice here is to always try to pick the right type of borrowing for your circumstances. e.g. Don’t apply for a low rate 6.4% AER credit card if you’ve got a chequered credit history. The MSE website has a great eligibility calculator that will tell you just how likely you are to be accepted before you apply.
Prioritise your applications too. If you’re considering applying for a mortgage, don’t apply for any credit cards, loans, overdrafts for at least six months prior, as a rejection on what might only be a £1,000 overdraft, could prevent you from securing your dream home and a £250,000 mortgage.
If you are rejected, then stop. Get a copy of your credit report, and go over it with a fine tooth comb. Make sure it all checks out, from past addresses, to old accounts, and linked histories. In fact this is something you ought to do at least once a year anyway (possibly more frequently), to protect yourself against fraud.
Equifax, Experian, and Call Credit are the big three providers in the UK. You can get a statutory report form them for £2, but by using a cash-back website it’s often possible to get paid by them to check your own history.
Not providing the right documentation
This one sounds simple. The lender asks for a bank statement or utility bill, along with a copy or a passport or driving licence. Easy enough until you remember that you opted for online banking/statements which won’t be acceptable, you don’t drive (possibly because you live in London), and your passport which you’ve had stored away somewhere is dogeared and needs replacing.
Even with the right documentation some banks such as First Direct will ask for a certified copy. Oddly, you can’t just pop HSBC (the owner of First Direct) and have them do it, but instead need to pay a solicitor or professional who is a personal FSA member.
Some even go as far as requiring proof of a work telephone number. For many that’s not a problem, but there are over 3.5 million self employed freelancers in the UK, many of which will use a mobile number or work from home without a dedicated business line.
Being too old
Age discrimination at its worst. There’s little you can do here. If the lender is concerned that your age is a risk factor, your only option is to try an alternative.
Both Halifax and Nationwide have increase the upper age limit on their mortgages, meaning those who are 60 years old and younger can now take out a standard 25-year mortgage provided they can prove they can meet the repayments in retirement.
No history of borrowing
Not having a prior history of borrowing can be as bad as having a poor credit history. Lenders want to see that you’re not a risk, and a well managed credit history helps to prove this. The only remedy here is time. You need to build up a history of responsible borrowing, but how can you do that without anyone being willing to lend to you in the first place.
The best place to start is our article ‘Get paid to (re)build your credit rating’