Home > Debt consolidation blog > How to: get approved for credit

How to: get approved for credit

4 April 2008

When people talk about ‘the credit crunch’, they mean that getting approved for credit isn’t easy right now.

In a credit crunch, lenders are very careful about lending money – partly because all the other lenders are watching their lending very carefully, so they’re not lending to each other very much.

Credit reports & credit approvals
It’s always true that some people find it easier to get approved for credit and others find it harder. But in a credit crunch, it might be almost impossible for people whose financial situation is (or has been) less than perfect.

To find out about your financial situation, any lender you ask for credit will probably check your credit report. This is your financial ‘track record’, which is maintained by the UK’s Credit Reference Agencies (Equifax, Experian and Callcredit), and which helps them decide how risky / safe it would be to lend you money.

It shows them how much you owe, how reliably you make your payments, and whether you have any defaults, arrears or County Court Judgments against you (either now or at any point in the last 6 years).

Improving your chances
If lenders don’t like what they see on your credit report, they might reject your credit application, or they might offer you credit at a more expensive rate.

So it pays to keep your credit rating as healthy as possible. You can improve your chances of approval – and your financial situation in general – by:

1. Checking your credit rating for mistakes. The Credit Reference Agencies will post you your credit report for about £2. If you find a mistake, you have the right to have it fixed.
2. Dealing with problems on your credit report. Entries like CCJs and defaults will stay on your report for 6 years – you can’t get rid of them, but if you pay what you owe you can have them marked as ‘satisfied’.
3. Being realistic. Always think very carefully before you apply for credit – figure out how much you would need to pay back every month, and leave yourself some leeway in case your expenses increase and / or your income drops.
4. Staying on top of your debts. Try not to pay anything late, if you can help it.
5. Opening a bank account. Not having one might make lenders think you’re not used to dealing with money.
6. Registering on the electoral roll. Lenders will check your name and address against the roll.
7. Talking to your creditors if you have any financial problems. See our 10 Golden Rules for negotiating with creditors.
8. Being patient. If you’re refused credit, don’t apply again and again to different lenders – each application is recorded on your credit report, so wait a month or two between applications or creditors might think you’re in serious trouble.
9. Getting advice. Debt specialists can help you manage your money, negotiate with creditors, prioritise your debts…
10. Getting help. You don’t have to fix your debt problems by yourself – there’s a wide range of professional debt solutions available, so find out which one could be right for you.

Of course, being approved for credit isn’t the most important thing. These 10 tips will help you steer clear of unmanageable debt and the many problems that can cause – and that’s even more vital than looking after your credit rating.

Back to debt consolidation blog home