12% of Brits experience ‘credit rejection agony’

Some 12 per cent of Britons have been turned down for credit in the past three years.

Newly-released research by Confused.com has found nearly one in eight individuals have been unsuccessful in their attempts to get additonal unsecured lending during the time period. 

While some may have been rejected for minor reasons, such as not having the right address on their application form, others will have been told no because they already have significant debts.

How can you improve your credit rating? 

Consumers have long been confused by credit ratings, especially as lenders use different formulas to calculate them. However, 60 per cent of respondents admitted they have no idea what their credit rating is, while 21 per cent of this group are clueless about what steps to take to improve it. 

On top of this, 16 per cent admitted they have poor credit – this means they could struggle to even be awarded a mobile phone contract – while 30 per cent of this group have turned to unauthorised or private money lenders.

There are some simple steps that people can take in order to boost their credit rating. Firstly, they need to make sure they are on the electoral register, they should avoid applying for too much credit in too short a time period, while unused credit card accounts have to be closed down. 

People in the north-east were found to have the worst average credit rating in the UK, followed by Lancashire and then Wales and West. Of the 13 regions studied, north Scotland posed the lowest typical risk. 

A responsible attitude 

Worryingly, too many Britons are only thinking in the short-term when it comes to applying and using credit. Nearly half (48 per cent) do not think about the damage they could cause to their credit history by seeking out short-term, high interest loans.

If people fail to demonstrate a responsible attitude, they could find themselves trapped in a cycle of debt, constantly having to borrow in order to pay off existing arrears. 

Nerys Lewis, head of credit cards at Confused.com, said: "We want Brits to get to grips with their credit rating, understand what affects their credit score and try to improve on it. By simply understanding their finance situation better, it can give people a better chance of getting that mortgage, loan or credit card – and at the very best rate."

Dealing with debt

Recent statistics from The Money Charity show the severity of the situation facing some people. As well as 285 people being declared bankrupt or insolvent every day, 79 properties are being repossessed every 24 hours.

In October, average consumer borrowing – including credit/store cards and motor finance deals – was £3,610 per adult.

If people are struggling to make ends meet, seeking out a debt management solution is advisable. Not only will this move offer them the chance to rein in their arrears and reduce monthly payments, it will also provide a structured template for doing so. 

By Amy White