Failing a Credit Check can be disappointing right? If your credit history is like mine then you are probably not that surprised that you have failed. For others who appear to have a good credit history, failing a credit check can be a cause for concern.
With the above in mind, today I am writing about some of the reasons behind why you might have failed a credit check.
Too many applications in a short period of time
If you have made a large number of applications for credit in a short space of time, this can serve like a warning flag to any potential lenders. In their eyes it appears that you may be desperate for credit and so you could be declined for that reason alone.
If you have failed a credit check, before making any further applications you should get a copy of your credit report. You can find details on how to do this for free at the end of this post.
You already have enough credit
Your credit history may be great but you may already have too much credit. Additionally this can even apply to potential credit, what I mean by this is if you have a credit card with a zero balance but say a £5000 credit limit. The potential is there for you to spend that £5000 which could put pressure on your finances.
Typically you may be told you failed the credit check due to affordability, although your income may have played a part in the decision as well. Lenders have become a lot more cautious in these new economic times we live in and affordability plays a part in their calculations of whether to lend to you or not.
Adverse Information on your Credit Report
This is one of the reasons why I would fail a credit check. Adverse Credit History includes data such as Defaults, Bankruptcy, County Court Judgments or IVA’s registered on your credit file. Multiple missed payments and accounts in arrears will also severely limit your ability to get credit.
Information such as the above remains on your credit report for quite some time. It is just a case of managing what credit you do have well and waiting for the above adverse information to no longer be reported on your file.
Not on the Electoral Roll
A potential lender likes to know that you are who you say are and checking that you are on the electoral roll at your present address is one way they check this. If you are not registered then this could be a likely reason why you have failed a credit check. It is easy to register. You can do so here in a matter of minutes.
You are punching above your weight
What I mean by this is that you might be applying for a credit product that you have no hope of being accepted for. As an example with my current poor credit rating, if I went to my bank and applied for a Credit Card, alarm bells would sound and I would likely be escorted off the premises… OK so maybe not quite like that but the reality is currently with a poor credit profile I would have no chance with a bank. I would receive a standard response to say I failed the credit check due to information on my credit report.
With a poor credit score I would have much more success applying with a subprime lender such as Aqua Card. The reason why I would be more likely to be accepted is Aqua has a much different criteria than a high street lender such as a Bank. They also have a higher rate of interest too. Moving on.
You could also look at lenders that perform a soft search. These are typically the ones that say they can check your eligibility without leaving a footprint (registered search) on your credit report. That way you can see what your chances are without applying in full or impacting your credit report. Capital One are an example of a lender who provides such a service.
Too much Debt
If you have too much debt this could cause you to fail a credit check. Multiple Credit cards that are maxed out with only the minimum payments being made could potentially put off a lender. The best way forward would be to pay down your debt first before making any further applications.
This also links into the reason I wrote about above where the lender considers that you already have enough credit.
Incorrect Information on your Credit Report
Your credit report may contain an error that has caused you to fail the credit check. The only way to know this is to check your credit report yourself. It happens more often than you would think so it is definitely worth checking if you have recently failed a credit check and are not sure why. Your credit report is maintained by several Credit Reference Agencies and different ones are used by different lenders.
Checking your Credit Report for Free
I mentioned above about checking your credit report. The good news is that you can check your credit report for free! I currently use two free credit report checking services. One is called Noddle and the other is called ClearScore. PS those two links are not affiliate links. Just plain old hyperlinks to make your life easier. The ads on this blog are elsewhere but you either blocked them or are already aware of where they are!
I have also written a Noddle Review if you would like to find out more about them.
Back on topic, both of the above will give you a so called ‘credit score’. Whilst nobody has a credit score as such, the score the above organisations provide is usually a reasonable indication of your credit health. In fact each lender will have their own way of calculating your score and if your score is above their minimum level, you are usually accepted for credit with the lender.
It is a good idea to check your credit report when you have failed a credit check to make sure that it doesn’t contain any mistakes. I would definitely recommend doing so if you haven’t done so already just to be sure.
Thanks for reading, I hope you can find out why you have failed your credit check!