failing the credit check

Reasons for Failing a Credit Check

A credit check is run when you apply for new lines of credit, a loan, a mortgage, or even a rental apartment or office space for your business. So, if you are getting ready to apply for a line of credit, and want to avoid a credit check failure, understand a few of these common reasons people do fail credit checks when they’re run.

Bad credit

It’s pretty straightforward. If you have a score of 350, you likely aren’t going to pass most credit checks, for anything. Credit worthiness, your ability to repay, and how trustworthy you are, go a long way in credit check approvals. Therefore, you need to maintain a healthy score, and take all precautions to ensure there aren’t inaccuracies in your credit score.

Credit searches

If you constantly apply for new lines of credit, this might result in credit check failure. If new creditors or potential creditors see you rely on revolving lines of credit, they might not be as willing to extend a new line of credit, that they would with those who aren’t as dependent on credit cards. So, keep the checks down to a minimum if at all possible, to avoid failed future credit checks.

Too much credit

This tags off the previous reason, but if you have 20 open credit cards, the 21st might be the one you are declined for. Too much credit shows you are a risk to default. If you are simply relying on credit cards to pay every account, you might not have a steady job, or simply like to spend/live out of your means. This can cause a denial when a credit check is run.

No credit

On the flip side, if you have no open credit history, and are applying for a major credit card, or a very large loan, a denial is probable. Since creditors can’t view your credit history, they aren’t going to trust you with a £20,000 line of credit. So, start small. Go for a store card or apply for a catalogue card instead, and build your credit up from there, before applying for major lines of credit or loans.

Profile match

Creditors have the right to deny you if they feel you aren’t a good candidate for their ‘profile-candidate’ type. So, if it is a type of credit you’ve never applied for, or something opposed to your typical purchase history, you might be declined.

Address changes

If you don’t have a steady home address, are moving every other month, or are evicted because you can’t pay rent every few months, this doesn’t bode too well if you want to apply for new lines of credit. If you can’t afford your rent/bills you have to pay, how are you going to afford paying those items you want (not need)?

There are many reasons you might be declined if you are having a credit check run for a new credit card or loan. Understanding these, and other possible reasons for rejection, will help you better position yourself, and build your credit score up, to avoid these denials in the future.