Refused Credit or a Loan? What You Should Do Next

Everybody goes through periods of financial hardship. When you feel as though you don’t have enough money to cover all your costs, you might wonder how you are going to survive. One option for people in your position is borrowing money from a reputable lender.

Of course, there are many lenders from which you may want to choose. You can even apply for a loan online. Once you have filled in all your paperwork and sent it off, it’s a waiting game. Many lenders will give you a verdict on your application a few weeks after you send it off.


If, when you open your letter, it says that the lender has declined your application, you might not know what to do next. If you desperately need money, you might find the rejection stressful.

In the same respect, if you applied for a credit card and your bank refused your application, you might need to find a way to fix things. Here is what you should do next.

Why would a lender decline you?

Okay, first you need to work out why a particular lender doesn’t want to loan you any money. If you can’t prove that you have a stable income, you will find that this is the reason. Before lenders give personal loan, they want to ensure that they can pay them back.

If you have a casual job, rather than one which pays you a monthly salary, that could be your problem. You might also find that your credit score is holding you back when it comes to getting a loan. Rather than speculating on what the cause could be, you ought to ask the lender. When a lender decides whether they will approve a loan, there might be all types of reasons.

Things you need to know

You are well within your rights to ask your lender why they declined your application. You should never fear asking this question. In fact, it is the only logical thing to do. You need to know whether the rejection was a result of your credit history.

If your lender confirms this suspicion, you should ask them which credit reference system they used. There are a few different companies that provide this service and, sometimes, their results are not the same. Ask your lender to take you through their processes so that you can understand what the problem is.

Improve your credit history

If you find that your credit history was the issue here, you need to work to improve it. You should avoid doing many credit checks. You might want to track how your credit score is doing, but the more checks you do, the worse it will be. If you continually check your score, you could ruin your credit history. There are many ways in which you can improve your credit score.

Unfortunately, many of them involve borrowing money. Since you are having problems borrowing cash at the moment, it is not a viable solution. If you currently have a load of debt, you need to start taking steps to clear it. You can talk to a free financial adviser to help you with this step. If you need money in the short term, though, you need to look at what your other options might be.

Credit unions

If a commercial bank declines your application, you could consider trying a credit union instead. These organisations are non-profit, which means that they won’t charge you loads of interest. In fact, the unions will only charge you around 2% interest per month. That is a minimal amount.

Often, these organisations will loan money to people who have poor credit scores. The companies are there to help people make responsible choices when it comes to their finances. You should see whether there is a credit union in your region and contact them about getting a loan.

Cash for gold

You may have seen adverts online or on TV for ‘cash for gold’ services. The price of gold is always quite stable, which means that some companies will give you a good amount of money for your precious metals. If you have a plenty of gold jewelry, you might want to sell it to a company like this one.

If you have other valuable items in your home, you could consider selling them at a pawn shop. Be aware that some pawnbrokers will only give you a fraction of the original item value. If you can avoid borrowing cash and still cover your costs, you should do so. The last thing you want is to get into debt.

Budgeting loans

If you are currently receiving Income Support, you might qualify for a budgeting loan from the Social Fund. You should speak to an adviser at the Jobcentre Plus to see whether you have the right to apply for a loan of this nature. Often, the loan disregards your credit score, which means that you can borrow money regardless of it. If you have savings, though, you will not qualify for this loan.

Things to avoid

There are options out there that might tempt you, but some of them are truly dangerous. If you are considering getting a payday loan, you might want to think twice about it. Often, you will end up paying back much more than you borrowed. You must make sure that you read the small print before you sign an agreement. That way, you won’t end up paying over the odds. You should also avoid loan sharks. Aside from being illegal, these lenders can turn nasty if you don’t pay them on time.

Debt management

If you plan on borrowing money to clear an existing debt, you need to get some straightforward advice. The more money you borrow, the deeper into debt you will get. If you currently have financial problems, you can get some free advice online. You need to work out a way in which you can start to clear your debts without jeopardising your finances. Get some help now so that you can start working towards financial stability.