· Check your credit report for errors
It could be that there are inaccuracies on your credit file that are holding you back. For example, if your personal details are incorrect your credit applications could be rejected. Pay special attention to the number of accounts you have where you’ve taken out credit. If there’s anything you don’t recognise, contact the lender straightaway. It could be a sign of fraudulent activity. However, if these accounts aren’t yours, you need to address this issue as soon as possible. There also might be small things you can do to give your chances of acceptance a boost. Being on the electoral register, for example, helps lenders verify your address history.
· Stop applying for credit
Every time you apply for credit, it leaves a hard search on your credit file. This footprint is visible to lenders. Why does this make a difference? Well, if lenders can see you’ve been applying for credit a lot, they might think you’re too eager to borrow money. Put simply, multiple credit applications can be a sign of financial difficulty. As a result, lenders might not feel comfortable letting you borrow money.
· If you need to apply, check your eligibility before you do
It gives you an idea of how likely you are to be accepted for credit before you create a hard search. It works by carrying out a soft search on your credit history, using key pieces of information to create an idea of your financial credibility. Some lenders can see soft searches on your credit file, but they aren’t allowed to let this affect their decision. An eligibility checker gives you a percentage of how likely you are to be accepted. If your chances are low — don’t apply.
· Make sure you avoid inappropriate products
You’ve probably heard it before: you have to use credit to build credit. But if you’ve been turned down for credit a lot, how can you do this? No matter how desperate you are to borrow money, you should avoid payday loans. They can be more painful than stepping on Lego, and often make your financial situation much worse.
· Consider prepaid credit cards and guarantor loans to rebuild your credit.
These work similarly to a pay as you go mobile phone. You top up the card with a certain amount and use that card for your spending. It means you can’t have a balance below £0. There are a few varieties of cards like these, but you need to look out for one that has a credit-building option.