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What to do if You’ve Been Declined Credit

Being declined credit can be disheartening. Read more for tips and advice on what to do if you have been declined credit.
A man holding a declined credit application.

The most important thing to remember when you’ve been declined credit because of your credit check is not to panic.

If you’re applying for a loan, mortgage, or any other kind of credit, you may have decided to check your credit report. It’s possible to fail your credit check because your credit rating is too low – this can be detrimental if you’re looking to become a homeowner or if you’d like to take out any kind of personal loan.

We explain how you can work through your declined credit check, or even obtain a bad credit loan to help rebuild your credit score.

Even if you’re not thinking about taking out credit right now, it’s always important to keep an eye on your credit history for your future lending prospects.

Understanding your credit report

Credit reference agencies will check your financial history and give you a numerical credit rating – if this score is too low then you might be refused credit. But it is not their decision whether you receive credit as the lenders decide. All the information is passed on to them. Often lenders won’t tell you why they’ve refused credit, but they will tell you which credit reference agency created your credit report.

It can be scary getting a low credit score or being declined credit, but any credit rating can be improved.

What happens when you've failed a credit check?

Thumbs down and a bad credit score.

If you’ve applied for credit and failed your credit check, the loan provider you went through will let you know. However, they may not let you know why. It may or may not be obvious why you’ve been refused credit, but usually it will be because you have a poor credit rating or there are mistakes on your credit record.

Once you’ve been refused credit, one of the most important things is not to keep applying (aka don’t make multiple loan applications). Hard credit searches affect your credit score which means more than one loan application in a short space can bring your credit rating down.

The next important thing to do is find out why you’ve been declined – then you can’t start to fix the problem.

What is a credit reference agency?

Credit reference agencies are the people who carry out your credit check. It’s not the lenders themselves who check – they just see the final credit report. If you have a poor credit rating, this is when you might be refused credit.

There are three main credit reference agencies in the UK:

  • TransUnion
  • Experian
  • Equifax

These credit reference agencies may work through third parties, so they may have different names or brands associated with them. But these are the agencies that will produce your credit file, and if you find a mistake on your credit report you’ll need to contact them directly.

Reporting a mistake on your credit report

It’s essential to report any mistake on your credit report, not only because it could bring your credit score down but it could also be a sign of identity theft.

If someone is using your name or details to open up bank accounts or take out loans, then you could end up in some serious trouble. This is also why it’s important to regularly check your credit report even if you aren’t thinking about taking out credit in the near future.

You can report a mistake on your credit file by writing to the credit reference agency that did your credit file. Include all your correct contact information and any evidence you can get of the mistakes. Make sure you clearly identify each issue (if there is more than one), include copies of your credit reports where there are mistakes, and request for that information to be updated or removed.

It’s important to do this as soon as possible and not wait until you want to take out credit. This is because the longer the issue remains on your credit report, the more damage it can do to your credit score.

Make sure you contact the correct credit reference agency. If you’re unsure who it is, contact the third party you got your credit score from and ask.

Understanding why you've been declined credit or have a low credit rating

Woman with a declined loan application.

You might be declined credit for many reasons, and they might not always be obvious.

We talk through the common reasons lenders decline credit applications:

  • The details provided were wrong - If a lender can't find your correct address or confirm your identity, then they'll likely decline your loan application - this can even be a minor mistake, such as Flat A vs. Flat B
  • You have a limited credit history - A lender needs to see you can meet payments and if you have no record of that, they might not lend to you
  • Your employment status - If you are unemployed or have a low income, they might be reluctant to lend you money
  • You've made several loan or credit applications within a short period - This could be a red flag to lenders that you're struggling financially
  • You're financially associated with someone who has a bad credit history - You might not know this but your financial health can be affected by someone else, such as your partner, if you have a mortgage together
  • You have defaulted payments - This could be missed or late payments towards rent, debts, or even utility bills.

It could be as simple as that you don’t meet a lender’s specific lending criteria. All credit providers have their own eligibility checker – this can mean it’s harder to get credit from some loan companies than others. Ultimately, it’s the lender’s decision and they’ll only lend to you if they’re 100% sure you’re a responsible borrower.

How can I avoid being declined credit?

There are ways to avoid being declined credit and most of those start with your credit score. However, there are some more technical details to consider as well.

We give a run down of the ways to keep your credit report up to date and more likely to be accepted:

  • Make sure you're on the electoral roll - this proves to lenders where you live.
  • Make sure you're up to date on your utility bills and council tax.
  • Keep a record of your employment history.
  • Don't submit a joint application for credit with someone you can't financially vouch for.
  • Avoid getting a hard credit search aka hard inquiry.
  • Double-check every detail when making a loan application - small mistakes can be costly.

The simple matter is, if you don’t have an excellent credit score, then you could be refused credit even if you’ve never missed payments on a debt or loan.

What happens after you've been declined credit?

If you’ve been declined credit, you might be thinking what next? How can I get a loan now?

Ask yourself:

  1. What do I need credit for?
  2. Is it urgent? How long could I wait?
  3. What are my other options?

If you’re trying to get a mortgage, being refused credit can feel like a big setback. But you have to keep in mind that these things always take time. Whether it’s for a house, a start-up, or to fund a new venture, your ideas might have to be put on hold for a short period.

If you’re looking to get credit to cover emergency costs, there might still be options out there for you. The UK government offers some help for people who are unemployed or with low income to afford emergency costs.

If you’re trying to get credit because your debts are getting out of hand, then you still have options open to you. A debt consolidation loan is a specific type of loan that helps borrowers pay back other debts.

Does getting refused credit impact my credit score?

Any kind of hard credit search will impact your credit score, whether you are refused credit or have a successful application.

It shows other lenders you have sought credit recently. For example, if you make a credit card application and get declined, it will show on your credit report for other lenders to see.

When can I apply for credit again?

Don’t apply for credit again straight away. Wait at least six months before making another credit application. This may seem like awhile, but you need to work on improving your credit score in this time, otherwise you might just be refused credit again.

See our page ‘How can I Borrow Money with Bad Credit?‘ for tips on how to improve your credit report.

An image of a hand pressing an apply button on a mobile phone screen.


The key points to take away are:

  • If you're refused credit, don't panic - you may still have options
  • Don't apply again straight away
  • Wait six months to reapply
  • Work on improving your credit report in the meantime

If you can’t wait for credit because you are facing financial difficulties due to multiple loans, consider a debt solution. For example, a debt consolidation loan enables you to borrow enough money to pay back all your debts, leaving you with just one monthly payment to your provider. This should leave you with more money left over at the end of every month to enjoy your favourite things.

If you’re interested in a debt consolidation loan fill in our online application to see if you qualify.

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APRs from 5.8% to 89.9%

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Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

Secured Representative 11.7% APR

If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

Further reading

What are the Different Kinds of Unsecured Loans?

Understand what an unsecured loan is, and how best to use the different kinds of unsecured loans in 2023.

What are the Different Types of Secured Loans?

With so many different types of loans available, it can be difficult to know which is right for you. For more information on secured loans, read this expert article.

Persistent Debt – What Does it Mean for Your Credit?

Persistent debt can affect your credit rating for a significant time period. Read to find out more.