Have you been refused a loan?

We understand how you may be feeling right now. Do you dread opening your mail? Have you been refused an overdraft? Have you been refused a loan?  If so please call 0800 074 6918. We understand that if you’ve been refused a loan before because of a bad credit record or CCJs, it can lead to embarrassment.

If you’ve been refused a loan by other lenders because of bad credit you can still apply to The UK Insolvency Helpline for alternative debt help procedures.

What to do if you've been refused a loan to clear debt

If you've been refused a loan to clear debt or credit, or you're worried that you might be, you can check the information that's kept about you. If it's wrong you can ask for it to be corrected. If the information is correct and you're worried about your debts you can get free help.

How lenders decide who to lend to

When you apply for a loan or credit, lenders want to know that you're going to be able to repay any money they lend you. The two key ways they usually assess this are:

• work out your 'credit score' by asking you a series of questions
• check your 'credit history' with a credit reference agency

Credit scoring if you have been refused loans to clear debt

To work out your credit score lenders ask you for details of:

• your income
• your expenses
• major things you own - like your home
• any other loans you've got

They give points for each of your answers. If you don't score enough points, they may:

• offer to lend you a smaller amount
• charge you a higher rate of interest
• Refuse to give you a loan

 A lender won't usually tell you why they've refused you a loan but they may give you a general idea if you ask them.

Can you ask them to reconsider if you have been refused loans to clear debt?

You can ask them to reconsider if:

• they made their decision just using a computerised credit scoring system
• you've got information that might make them change their mind

Applying to different lenders to get loans to clear debt

Lenders score customers in different ways, so you can try again with another lender. But bear in mind that each application will be noted on your credit file kept by credit reference agencies. Too many refused applications will have a negative effect on your credit history.

Credit reference agencies

Credit reference agencies hold information (called a 'credit history') on most adults in the UK. This information helps lenders assess the risk of lending to particular people, and reduce the risk of fraud. The main agencies are Experian, Equifax and Callcredit.

To put together your credit history the credit reference agencies get information from several sources, including:

• the electoral register
• County Court judgments
• bankruptcy orders
• other lenders - to check that you've kept up to date with other loan repayments
• details of house repossessions

Your right to check your credit file if you have been refused loans to clear debt. You can't stop lenders checking your credit file, but the law says you can see what's on it. You'll have to pay, but credit reference agencies can't charge more than £2 for this. You may also be able to see your file online, but this may cost more.

Options if you have been refused a loan or refused loans to clear debt 

If you have been refused a loan, your debt problems may well be leading you may need to take debt advice. We would always recommend that you let your partner know that you’ve been refused a loan by other lenders and that’s why you’re looking into the alternatives. In the UK there are several solutions to just borrowing more money and getting yourself deeper in debt such as:

IVA – Individual Voluntary Arrangement

If you have been refused credit or loans in the UK you can still clear debt with an IVA. An IVA is a legal agreement with creditors (usually non-priority creditors) to repay your debts. This could either be in part or in full. The arrangement is negotiated, written up and checked regularly by an independent solicitor or accountant called an Insolvency Practitioner. Not all the creditors have to agree to an IVA as long as the creditors to whom you owe 75% of your debt agree. An IVA is a legally binding method for help with debts if refused a loan in the UK.

Debt Management Plan

A debt management plan is an arrangement with your creditors to pay back the debt by regular installments. Instead of you speaking to your creditors yourself to arrange the plan, a Debt Management Company Plan does it for you. A debt management plan is structured method for help with debts if refused a loan in the UK.

Bankruptcy

Bankruptcy is a court order that you can apply for if you are in debt. Once you have been made bankrupt, you don't have to deal with the people you owe money to (your creditors). An official called the Official Receiver takes control of your money and property, and deals with your creditors. Bankruptcy is a government scheme for help with debts if refused a loan in the UK.

Secured Debt Consolidation Loans

If you are a homeowner and you have equity in your property a secured loan may be a viable option. However, if you’ve been refused a loan before, you will need to provide proof of regular income either with payslips or a P60.

We understand that if you’ve been refused a loan before because of a bad credit record or CCJs, it can lead to embarrassment. If you’ve been refused a loan before, you’ll be delighted at how easy it is to apply for help.

The UK Insolvency Helpline is the leading provider of free and impartial debt advice on serious debt problems in the UK. We understand how you may be feeling right now. Do you dread opening your mail? Have you been refused an overdraft? Have you been refused a loan?  If so please call 0800 074 6918.

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