Failed a credit check? Here’s what you can do

There’s no doubt that failing a credit check can be demoralising. It can also make you wonder why you’ve been deemed a credit risk to certain lenders. But the good news is that there are lots of things you can do after failing a credit check to improve your credit score and reduce the likelihood of it happening again in the future, as we explain below.

What are credit checks? 

Credit checks are conducted by lenders to ascertain your suitability as a borrower. Typically, a lender will contact one of the UK’s three credit bureaus – Experian, TransUnion or Equifax – and they will be given your credit score. This score is based on your history as a borrower and will ultimately determine whether or not you’re approved for credit. But if you fail a credit check, it’s not the end of the world. Here are some things you can do: 

Check your credit file 

Your credit file consists of a lot of data about your financial history. As a result, errors can occur and may even derail your application. The best way to keep your file up to date is to check it once a year, or at least before making a future application. Since the Data Protection Regulation in 2018 (UKGDPR), it has been free to check your credit file, and Money Saving Expert has an excellent guide on how to go about it. 

Register to vote 

If you’re not on the electoral roll, you can indirectly damage your credit profile. The good news is that signing up to vote couldn’t be simpler, and you can do it directly on the government’s website. Credit bureaus use the register to verify your identity, particularly in regards to your current address. Registering to vote is such a simple step, but it can make a huge difference to the outcome of a future credit application. 

Get better at managing your repayments 

One of the biggest threats to your credit file is missing repayments, and it has a disproportionate impact on your score. A good way to ensure you never miss a repayment is to set up a direct debit that covers the minimum payment each month. You can then top up the repayment when the month ends if you have additional funds in your account. At least if a direct debit leaves your account each month, you won’t miss your repayments, which will help your credit file as a result. 

Consider your partner’s file (or that of your ex) 

If you’re financially linked to your partner in any way – be it a joint account, joint loan, or even a joint mortgage – their credit history will affect your score. Therefore, if you’re in a relationship with someone who has a bad credit history, it makes sense to keep your finances separate. You also need to make sure you financially disassociate yourself with any ex-partners, as failing to do so means your credit histories will continue to be linked. 

Look for Open Banking lenders 

Although a credit check is the main way that lenders consider your suitability for credit, it’s not the only option. Since 2018, Open Banking has enabled lenders like Koyo Loans to get a clear and accurate picture of your current financial circumstances by securely accessing your financial data. In other words, our decision about whether to issue you with credit is not solely down to your credit score. 

How Koyo Loans can help you 

At Koyo Loans, we offer unsecured personal loans between £1,500 and £12,000. 24.9% APR Representative. We make use of Open Banking to assess your application, along with credit bureau data. Use our loan calculator today to see how much you could potentially borrow before submitting your application.

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0JL