Rejected For Credit? Change Their Minds!
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Lenders are battening down the hatches, so everyone's finding it harder to borrow at the moment. This doesn't mean you should give up, it means you must try harder!
But, at the same time, we want as few footprints on our records as possible. That's why I think it's worth appealing against the decision when you're rejected for credit, rather than applying for a different product. But first...
For those of you with debt difficulties
If you've been rejected for a loan because you've got debt trouble or have missed payments then perhaps there's a good reason you were rejected!
Furthermore, it's likely that anyone in that situation should consider alternatives to yet another loan or credit card, as this revealing poll on consolidation loans reveals. (The subsequent discussion is interesting too. Read it here.) One alternative to consolidating is the excellent technique of snowballing.
Otherwise, what can you do if you've been rejected?
Firstly, if you've been rejected for a credit card, check to ensure you don't already have a card from the same issuer, as explained in Baffled By The Brand! A few large card issuers provide credit cards for dozens of brands, and they won't let you swap with them from one deal to a better one.
If you've been rejected by a different issuer, or if it was a personal loan you applied for, you have two next steps:
- Check your credit record
- Appeal the decision
Check your credit record
Write to all three credit-reference agencies to get your reports. There's no point using just one, because their records vary, and you don't know which one(s) that the lender checked before it rejected you.
It costs just £2 for each report and, according to one of our board users, stupot100, it was 'the best £2 (he's) spent in a long time'. After having been rejected for credit, he found that some debts that had been settled were still showing as outstanding. He contacted those lenders and they agreed to get the record changed.
Here's where to contact them:
Experian - through that link you can apply online or get the address to write to with your £2 cheque.
Equifax - apply online from that page, or write to: Equifax Plc, Credit File Advice Centre, PO Box 1140, Bradford, BD1 5US.
Callcredit - you can't apply online for the cheap £2 report, so this link is for an application form to download and post.
Appeal the decision
I wouldn't wait too long for the reports to arrive though, because you really should get your appeal in to the lender as soon as possible.
Several board users have written messages over the years stating that, after being rejected, they wrote to the lender and it changed its mind.
The advice given by various posters who have had their decisions overturned includes:
- When you appeal, many lenders admit their first decision is usually made by a computer. The computer can be very strict, perhaps even rejecting you simply because you've recently changed jobs or address but, when you get a human involved, the lender can become more flexible.
- One wrote merely asking why he was rejected, and the lender wrote back saying it had changed its mind.
- Others wrote stating that they met all the criteria that the lender seemed to want and so the lender wrote back overturning its original decision.
- Finally, one asked why he was rejected and asked when he could apply again. Then he set out his financial position, and included his name, address and date of birth. His application was overturned as well.
Personally, I recommend that you keep your letter short and polite, but include a list of details about yourself and your financial position. If you feel that there is some information that wasn't taken into account, e.g. you think you are responsible with your money or you're due a big pay rise, then say so!
It can't hurt to try. Or can it?
When you appeal, I don't believe that lenders usually look at your credit report again, but some will do. This means that you risk leaving another 'footprint' on your credit record, and too many footprints are seen as a negative point to many lenders.
On the other hand, you'd get the same footprint if you applied for credit elsewhere. Moreover, on most occasions you won't actually receive another footprint, so you're effectively getting a second shot at your preferred credit card or loan for free!
If you've been rejected and have appealed in the past, or if you do so after reading this article, please post a comment below to let other Fools know how you got on.
> As some of our Dealing with Debt users correctly say, when you borrow you're not borrowing from the bank, you're borrowing from your future self. So, before borrowing for any reason, see what the true cost of borrowing really is in How To Spend Less And Have More. The more you borrow, the less stuff you'll be able to buy in your lifetime!
> Compare credit cards and personal loans.
> You can see your Experian credit report for free and online with a no-obligation 30-day trial of CreditExpert.
