Imagine the scenario if you will, you've applied for a loan or mortgage and are earning enough to meet repayments.
You may already be making plans for where to prioritise the finances and are waiting for that acceptance letter to arrive.
The mail arrives, and amongst the bills and junk mail you find a letter from the loans company saying you have been unsuccessful in your application.
There may be an initial feeling of shock and disbelief, however, this is not an indication for panic; there are steps you can take to find out what went wrong and what you can do to ensure future successful applications.
Failed applications for loans and mortgages can be an indication of blemishes on your credit record. It is advisable to check your credit rating for any factors which may have affected your score, some of which you may be unaware of.
Bad marks on your credit rating can be accidentally accumulated as a result of factors such as:
- Missing credit card or loan payments
- Failure to maintain regular employment
- Overlooking parking fines
- Missed payments of utility bills as a result of changing address or divorce
- Multiple rejections for prime-rate loans
Lenders are required to reveal details of reference agencies used to determine credit ratings when rejecting applications for loans; however they cannot reveal what the credit problem is due to data protection laws.
By keeping an eye on your credit rating and taking action to rectify any issues that could affect you in the future, you can increase your chances of acceptance during applications for services such as secured loans.
Through contacting credit reference agencies and explaining mitigating circumstances - such as divorce - you can have notes put on your file which lenders can then view and take into account when processing your application.
There is still the potential for lending with blemishes on your credit rating; however you may find yourself being classified as a sub-prime borrower - depending on the severity of your credit rating - which will often lead to paying higher rates of interest.
Secured loans are also possible under adverse credit conditions; however you will find yourself at a higher risk of repossession if you cannot keep up with repayments.
Before applying for loans and mortgages it's a good idea to double check your credit score, and get it in shape if possible, taking such action will hold you in good stead during future applications, and punctual payments will also go down well on your future credit score.
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