Credit is a slippery beast. This is something that those with poor credit reports and escalating debts know all too well. For such individuals, being refused credit is standard-fare, if they’re in a position to apply at all.
But, credit setbacks don’t just happen to the people with obvious reasons for refusal. In fact, many a millennial borrower faces the setback at least once. That can come as an incredible blow when you think that you’re just going through the application motions. Worse, it can prevent you from achieving the mortgage, loan, or other credit routes that you need to progress.
The main thing to note is that you need to stay calm if this happens. While panic can fast set in, it’s not going to do you any good, and it certainly won’t help you to overcome the issue. Rather, you need to think as logically as you can about why you might have been refused in the first place.
The fact is that refusal doesn’t just happen and is a sure sign that something is going on behind your shining credit surface. Only by realizing this can you repair the damage and hopefully gain approval next time. But what are these potential hidden setbacks, and what can you do about them?
Often, unexpected refusals happen for surprisingly simple reasons. Small mistakes somewhere on your application itself could even be behind this setback. While annoying, this is the best-case scenario as it allows you to reapply within as little as a few hours.
Rather than panicking when the computer says no, you should thus flip back through your paperwork. One wrong zero could be all it takes to unravel your credit plans, yet this problem could easily slip all attention. After all, most credit applications are either done online or put straight into the computer, making mistakes like these far more likely.
If you do spot an issue, take steps to rectify it straight away. If applying online, retry there and then for a much happier ending in minutes. If not, rebook your appointment and explain the mistake. Then, you can attend your next meeting knowing that you shouldn’t have the same problem next time.
Mistakes on your credit report
According to Coulter Credit, 79% of all credit reports in the US contain mistakes. As such, even if there’s no reason for your report to be less than perfect, it’s always worth checking. The good news is that the majority of companies use soft checks so that applying in itself doesn’t do any damage. But, it may be that there’s a mistake somewhere in your credit backlog that’s dragging your report down.
Luckily, there are steps you can take in this instance, and seeking professional credit repair is the best option. That way, experts can take action on getting any mistakes struck from your record, all without your having to do the legwork yourself. Even if you don’t intend to reapply for the same credit anytime soon, this is a step you should take sooner rather than later. That way, your credit score will have plenty of time to creep up again, thus ensuring that you never experience refusal or the embarrassment that can bring, again.
A lack of credit history
For millennial first-time applicants, especially, unexpected refusals happen purely due to a lack of credit history. This is something that many of us don’t realize when we first start applying, but we don’t automatically start life with credit reports. In fact, before you’ve borrowed money or paid bills, your lack of credit history will be seen by some as worse than a poor rating. After all, you’re an unquantifiable risk at this early stage in the credit game.
Sadly, overcoming this problem can be pretty frustrating, but it needs to happen if you’re to progress, credentially speaking. The easiest way to address this problem is to seek credit cards that don’t require high credit scores. This is bad on the surface because it typically means low lending ceilings with insanely high interest. But, there is a way to get by without once landing yourself in debt.
All you need to do is treat this credit card for what it is – a means to building credit. Rather than using credit to buy things that you can’t afford at the time, buy only what you can pay back the moment your bill arrives through your letterbox. That way, you never need to worry about interest, and you’ll still be able to enjoy a budding credit history that finally gets your lending on track.
The problem with patchy employment
Strange as it may seem, your employment history may also be behind a refusal out of the blue, especially if you’ve held a lot of positions for short periods. The fact is that, while employment doesn’t impact your credit report, you will need to supply that information for credit applications. And, if your employment history shows that you struggle to settle, then lenders may see this a red flag. Equally, if you’re new to a job, a lender may refuse to let you borrow until you’ve been there for six months, or sometimes even a year.
Often, this issue is an afterthought where credit refusal is concerned, but it’s actually the trickiest problem to overcome. After all, you can’t strike those past jobs from your credit package. What you can do, however, is play the waiting game in your current position. Even with a lot of short-term positions in your past, a current role that you’ve held for a year or two should be enough to see you through.
A final word
Credit refusal can hit hard, especially if you don’t expect it. But, as you can see here, there are often some relatively simple reasons for this, and none of them is your fault. Keep this vital fact in mind, then do whatever you can to ensure credit acceptance that gets you back on track next time around.