Every-so-often even the most organised people sometimes need to borrow money. Most of us take it for granted that all we have to do is ask, and that lenders will be queuing up to make money by lending to us. It can come as a horrible shock when out of the blue we're turned down for credit.
So what can you do?
Your scoreIf you have been refused credit, there are a number of possible reasons, so your first step is to find out what's letting your application down. It's worth asking your lender what criteria you failed on. You should also get hold of your credit report from an organisation like Experian. It's this report that the lender looked at in order to decide whether or not to lend.
It doesn't show a 'score' as such. The lender will use the information on here - and put it together with anything else they know about you - to form a score of their own.
Your report shows a record of any money you have borrowed at the moment, and your repayment history. It shows your record for paying bills, rent or the mortgage. And it also shows any credit you have available that you haven't taken advantage of, any that you have applied for in the past, and any county court judgments against you - which you'll get if you have been taken to court for non-payment of debt.
Put things rightThe next step will depend on what you find on your credit report. At the most simple end of the spectrum you may simply not be on the electoral roll at your address - which lenders use to verify that your home address is correct. Contact your council and get on the roll, and you could solve all your problems.
Slightly more complicatedly, there may be a mistake on your report. If you find a mistake on there, you can contact Experian, who will work with the relevant organisation to have the mistake corrected. If there's not exactly a mistake, but there was a good reason for something in your financial past, you can add a notice of correction, which will let you explain the circumstances - in 200 words or less.
There may be signs that you may have been a victim of fraud, after-all four million Brits have been victims. It's worth checking our guide as to how to reclaim your identity, and Experian's Victims of Fraud team will be able to offer help and advice.
Poor recordThere is also the chance you'll be rejected because of something that went awry in the past. However, these issues are all resolvable in time.
If you can see a lot of borrowing on your report, it may be that lenders are worried about whether you can afford to take on any more debt. It may mean that you have to pay off some of your debts before you will be able to take on more.
If you can see you have borrowed up to the max on other cards and overdrafts you need to pay it down a bit, because lenders will see you using every penny of available credit as a bad sign.
If there are lots of credit cards opened and unused then the potential liability may be worrying the lenders, so it's worth closing down an uncompetitive deals you aren't using.
On the flip side, it may be that you don't have any borrowing at all on your record. Lenders are unlikely to be impressed with your money-management - and are more likely to worry that you have no record of payments. If this is the case, then you may have more luck applying for credit with your own bank - who will bear in mind your history with them when making a decision.
Alternatively you can take out a specialist credit card designed to help you rebuild your score. Make sure you stay well within your limits and pay your debts in full and on time. This will start to build up a credit history.
If there is a problem with repayments in the past - or you have been unreliable in paying bills or the mortgage - then there are no quick fixes. You will simply have to turn over a new leaf and build up a decent period of good payments. The good news is that lenders are more interested in your recent history, so good behaviour will pay off.
ApplicationsIf you have been turned down a number of times, and kept applying for more credit in the hope that someone would accept you, then you will have damaged your rating further, because lenders don't like to see lots of applications.
When you are ready to apply for credit, it's worth checking if a lender can 'soft check' your eligibility which doesn't leave a mark on your record - or enforcing decent breaks between applications.
It's never pleasant to be rejected for credit, but it pays to stop applying in the blind hope that somehow you'll be accepted by someone - and start taking positive steps to investigate your credit report and get yourself in a position when you can realistically expect lenders to start saying yes.