When applying for a loan, credit card, phone contract, or to rent a home, there’s a good chance your credit score will be checked.
A credit score check is a standardised, but often surface level, indicator that helps lenders and service providers make an assessment of how reliable someone is at managing money.
However, if something’s not quite right on your credit report, you might be turned down. Failing credit checks doesn’t always mean you’ve done something wrong, though and can happen for a variety of reasons, from missed payments to having no credit history at all.
In this blog, we’ll discuss the most common reasons why people fail credit checks. If you’re trying to improve your score, understanding these factors can help you stay prepared and avoid unpleasant surprises.
Let’s break it down so you know what could lead to you failing a credit score check, and how to strengthen your chances of getting approved in the future.
However, if you are struggling to get approved for a loan, especially if you have a low credit score, consider our ‘More Than Your Score’ loans. At Salad, we understand the credit score system is flawed, instead using Open Banking to assess affordability. To find out more, click here.
1. Missed or Late Payments on Previous Credit Agreements
One of the biggest reasons for failing credit checks is missed or late payments on past credit agreements. This could includes credit cards, personal loans, or even mobile phone contracts.
Frustratingly, many people end up not even knowing they’ve missed a payment. But when you don’t pay off your borrowed money on time, it’s recorded on your credit report and can stay there for up to six years. Lenders see this as a sign that you might struggle to manage repayments in the future.
Even one late payment can make a big difference, so it’s important to always pay your bills on time to protect your credit score and borrowing chances.
2. Too Much Credit or Maxed-Out Cards
Having too much credit already can hurt your chances of passing a credit score check. This is known as high credit utilisation.
For example, if you have a credit card limit of £1,000 and you’ve used £900, lenders may worry that you rely too much on credit or might have trouble repaying it. Maxed-out cards can be seen by lenders that you’re not managing your credit well, even if you’re making payments on time.
Ideally, try to use less than 30% of your credit limit. Keeping your balances low will show lenders that you’re in control of your finances and not over-stretching yourself.
3. Too Many Recent Credit Applications in a Short Time
Applying for multiple credit cards, loans, or finance agreements in a short period of time can make lenders nervous about your financial habits.
Each application will leave a mark on your credit report, and too many at once can look like you’re in financial trouble or desperate for credit. This can lead to lenders thinking you’re a higher risk, which can cause them to reject your application.
Even if you’re just shopping around, it’s best to space out your credit applications. Try to only apply when necessary and check if the lender offers a “soft search” that won’t affect your credit score.
4. Inaccurate or Incomplete Personal Information
Providing incorrect or incomplete personal details can lead to you failing credit checks. Lenders use the information you give them, like your name, address, and date of birth, to match your credit file.
If something doesn’t match up, they may not be able to find your credit history or could see it as a sign of fraud. Even simple mistakes, like a wrong postcode or spelling error, can lead to a failed application.
Be sure that you always double-check your details before applying for credit. Keeping your information up to date across all accounts will help ensure your credit file is kept accurate and up to date.
5. Having No Credit History at All
If you’ve never borrowed money or used credit before, you might not have a credit history, and that can actually work against you. This is because lenders check your credit report to see how you’ve handled money in the past.
If there’s no information, they can’t judge how reliable you are, so they may be cautious and decide to reject your application. This is particularly common for young adults, students, or anyone new to the UK.
To start building a credit history, consider getting a mobile contract or a credit builder card. You’ll also want to make sure you’re documented on the voter’s register, as this will also help. These small steps can help you start building trust with lenders over time.
For Fair Loans With No Credit Checks, Choose Salad
Above we’ve detailed the most common reasons people fail their credit checks. If you’re struggling to get a loan because your credit score is low, or you’re worried you might get rejected due to bad credit, we may be able to help.
At Salad, we make affordable loan options available for almost all employed UK residents. As one of the UK’s leading online lenders, we understand that the credit score system isn’t always fair. That’s why we use an Open Banking-based assessment to evaluate the financial situation of every applicant.
As a regulated lender, you can trust us to keep your financial data safe. Applying for one of our new loans doesn’t impact your credit score. We use Open Banking in our initial assessment. If successful, we report your loan to the CRA’s (Credit Reference Agencies). Your credit score won’t hold you back from being eligible.
To learn more about our personal loans, click here and to read more blogs like this one, visit our blog page now.
