Do you have any idea what your credit score is? Have you ever been rejected for a credit card or loan? It seems many people have experienced the embarrassing and inconvenient answer of "no", as between 11% and 18% of applications for credit were rejected by lenders in the last year.
In research carried out by Ocean Finance it seems our thirst for credit is on the increase, with more than a third (38.6%) of people surveyed applying for at least one form of credit in the last year – up more than 5% on 2013.
But many have been on the receiving end of rejections too as 18.6% of people surveyed were turned down by their bank last year when requesting an overdraft and it seems this is making borrowers look elsewhere for their credit, with peer to peer loans showing the highest acceptance rates at 86%.
Research showed that men were more likely to apply for credit at 43.6% compared to women at 34.4%, while the age group most likely to borrow are those between 25 and 34 (60.6%) compared with just 17% of those over 55 years old.
Happily for those wanting to get on the housing ladder, applications for a first mortgage was something lenders were most likely to accept, with more than eight out of ten (84.5%) first mortgage applications being accepted over the last year. However, with new mortgage affordability checks coming into play in a few days things could get a bit harder, but if you ensure your finances are in order and that you can afford to pay back what you intend to borrow then you shouldn't have too much of a problem.
Some consumers found they were neither accepted or rejected, but were instead offered their loan request at a higher interest rate than they had applied for – 4.6% of credit card applicants were offered the product at a higher rate than they had initially hoped for.
Ian Williams of Ocean Finance says: "It's interesting to see that the number of people applying for credit products has increased in the last year, which may be a sign that consumers' confidence continues to grow in the wake of the credit crunch. However, large numbers of people are being turned down when they apply for products like an overdraft or personal loan.
"In many cases applicants' credit ratings could be standing against them, even if they don't know it. It's therefore worthwhile checking your credit score before you apply for credit so you can see what your lenders see and – if it's necessary - take steps to improve your rating before you apply."
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