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Credit
references and repair
Why has my application for credit been
turned down?
I have seen an advert for a "credit references" company. What do they do?
What to do if you think your credit reference
contains incorrect information.
Why has my application
for credit been turned down?
When you apply for credit a lender will look into your credit
history by contacting a credit
reference agency. If there is evidence that you have failed
to repay your debt in the past, this will affect your chances
of getting a loan or credit card. Late payments, Default notices,
County Court Judgments and Repossession Orders may all result
in a refusal.
Lenders will also take into consideration the
debt you have
already and compare this to your income. If they believe you
have insufficient funds to repay the loan, again they will
turn down your application.
Sometimes, if you have been "shopping around" for
credit there will be a number of searches recorded on your
credit reference file. In some cases this may be sufficient
reason for lenders to refuse to grant you any further credit
even though you may have no intention of taking up all the
offers. The best way to avoid this is to compare companies
by rates and quotations without actually going through a full
application with each one.
Lenders should give you an indication of the reasons for
refusing you credit.
When this happens it may be tempting to turn to a credit references agency. This is very unlikely to be a good idea and
in some cases may make your situation worse.
I have seen
an advert for a "credit references" company. What do
they do?
Claims, made by credit references companies, that you can have
County Court Judgements or any other records removed are false
- this can only be done if they were incorrectly registered
or if the action against you has been discharged.
There are legitimate ways in which Judgments can be set aside
- for instance if the sum is paid within a month of Judgment
or if a person genuinely has not received the relevant summons.
Information on what to do in these circumstances is available
free from the County Court.
In a report published in May 2000, the Office of Fair Trading
warned against relying on credit references companies and suggested
that some such companies are simply fronts for a lender or
broker trying to sell you a loan. credit references companies
are unable to do anything that you could not do yourself.
What to do
if you think your credit reference contains incorrect information.
A credit reference agency must investigate your claim that
the record is incorrect. If you believe there are incorrect
entries, contact the agency immediately and try and give as
much proof as possible in order to back up your argument.
For example, send copies of any correspondence you had with
that lender. If you believe a CCJ
has been incorrectly registered, contact your local County
Court.
If the lender believes you would be unable to repay the credit
agreement:
Lenders will look at your current income and expenditure
and make a judgement as to whether you can afford repayments
on a loan. If they feel that you have insufficient funds to
do so it may be time to evaluate your situation. Once you
have been refused credit on these grounds you have few options
left.
If you feel that your monthly outgoings are high due to existing
debt, taking out more credit is not the answer. Rather than
borrowing from Peter to pay Paul address your financial situation.
Complete an INCOME
AND EXPENDITURE FORM in order to help you assess whether
or not you can realistically manage to make the necessary
repayments. If you find that you cannot then seek help. If
you continue to borrow money you risk making matters worse
so contact a debt advice agency for free advice.
Don't wait until it's too late
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