This is not the best decision as you will likely be declined again as nothing has changed. Before reapplying for credit, you need to assess and to find out why you have been declined.

Once you know the reason, you can take the necessary steps to ensuring your next application is successful.

There are three things that every credit provider will always look for when vetting you for credit:

1. A good credit score.
2. An income that is high enough to afford credit repayments.
3. Expenses and other credit obligations to determine your affordability.
4. An established credit repayment history.

If you don’t know what your credit score and credit profile looks like, sign up for your FREE credit check now with Kudough.

Top five reasons for credit applications being declined by credit providers:

1. Your credit history is not strong enough. Credit providers consider your borrowing and credit history in their decision-making process. If you have never had credit before, or if you’ve only had a small amount of credit in the past, it is likely that your credit application will be declined. Although, note that having a credit history does not guarantee that your credit application will be approved. Credit lenders favour credit applications where the applicant has an established, positive and consistent repayment behaviour.

 

2. You do not earn enough. Credit providers consider your income and your living expenses and other credit repayments to determine if you can afford the new credit repayment for the credit you are applying for. Depending on the credit providers appetite for risk, their own credit lending rules will determine if your application is successful or not.

 

3. You have a history of late repayments or defaults on your credit report. Credit providers take this very seriously as a default or missed payment indicates to them that you do not have enough money to comply with credit repayments or you are not good at managing your personal finances. This makes you appear high risk and will likely result in your credit application being declined.

 

4. If you have a judgement. If you have a judgement against your name, credit providers will most likely decline your credit application. A judgment is granted by the court when legal summons is issued, and you fail to defend the summons or make payment of the amount claimed. A judgment remains on your credit record for 5 years or until it is paid in full, or a rescission is granted by the courts.

 

5. Your current credit usage is too high. If the current balances on your existing credit facilities such as overdrafts, loans, clothing accounts and credit cards are too high. This can indicate to credit providers that you are too dependent on credit for everyday living expenses and that any new credit would be difficult to repay..

 

There is a ways to improve your credit profile to avoid being denied for credit when applying again:

• If you noticed an error or fraudulent activity on your credit report, you must lodge a dispute with the credit bureau where the information is reflecting incorrectly. If there has been an error or fraudulent activity, this will be investigated and then removed from your credit report within 20 business days.
• If it was rejected due to a poor credit record then you'll want to try and improve your credit record before reapplying. There are various way of improving your credit score such as paying your accounts timeously and if full, managing your debt utilisation per month, and monitoring your credit score to ensure it improves over time.
• If you were rejected due to a low credit score this can be because you don’t have enough credit history. You can apply for credit that is low credit risk such as network provider/ cell phone account or a retail account, but we do stress the importance that these to be used to build credit to show the credit providers that you are able to use and repay the credit provider effectively.

 

When should I apply for once I have been declined:

If you have been declined for credit, we recommend a resting period of 4 - 6 months before applying again. When you apply for credit the credit providers log queries against your profile and these will remain on your profile for approx. 1 year. If your profile has too many queries i.e. too many credit applications this can also be seen as a high risk profile to credit providers, therefore before you choose to apply for credit again, you need to ensure that your financial situation is favourable and that your credit profile is in order.

Final Thoughts

Managing your credit profile can be a daunting task but it’s very valuable as this impacts all aspects. You can also get the most out of Kudough’s service offering and get chatting to one of Kudough’s Credit Coaches where we can assist you through your credit journey and provide personalised coaching tips based on your needs and help you get access to the credit you need..

 

 

 

 

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