Credit refusal

Being refused credit is embarrassing and annoying, but most of the time it's perfectly legal. But how do these credit companies make their decisions? And what can you do to get accepted?

The points scheme

This is where points are awarded according to your job, salary, marital status and area of residence. Credit is given if you score enough points. If your application is refused you can ask for the reason why, and for the decision to be reviewed by the lender.

Credit reference agencies

A handful of agencies gather information about your place on the electoral roll, county court judgments, bankruptcy details, and payment record in previous agreements. Details of other people living at your address may affect whether or not you are given credit. If your application if refused because of a credit reference agency's records you can ask which agency was used. You can then get a copy of the record from the agency, for a fee, usually around 2 pounds. You can have the record corrected if it is incorrect or misleading. However, you can still be refused credit.

Bank references

A lender can ask for a reference from your bank but the bank cannot provide one without your authorisation. The bank may charge you for providing the reference. You are entitled to a copy of the reference given by your bank. Contact the bank if you think you have been refused credit because the information is incorrect.

A 'no credit' ring

A lender may draw a 'no credit' ring round a certain area or address, for example, a block of flats, a housing estate, or a particular street with a bad reputation, and refuse credit solely on this basis. If you think you have been refused credit because you live in a 'no credit' district you should report the company you suspect to your local Trading Standards Department. Their phone number will be under the name of the authority in the local telephone directory.

Don't give up

Getting credit can sometimes seem like an impossible task and it's easy to get despondent if you're turned down. If you are refused credit, you can still apply again either with the same company or another one. But the sad truth is you have no right to expect credit or to be given a reason why credit has not been granted.