It's important not to apply for several loans at once when you are researching the loan market. Every time you apply for a loan this leaves a note on your credit file and if you make multiple applications it can look like you have been refused by multiple lenders. New lenders looking at this could assume that other lenders are refusing you and so have an easy decision to make in also turning you down.



The best way forward then is to try and get loan agreements in principle without having the full credit search. Then compare whats on the table and apply for the loan that bests suits your needs. If a lender turns you down then you MUST find out why. Lenders are not required by law to tell you why you were refused but in reality most lenders will give their reasons. It is vital to get the reason for refusal and check the reason is valid before you consider applying for another loan.

What are lenders looking for? Obviously it's very important to the lender that you should handle the repayments of your loan and if you have been largely credit free in the past you might find it difficult to get the best rate for your loan. The only way a lender can judge your ability and attitude towards repaying loans is your credit track record so although you might think because you haven't been borrowing regularly you're a good bet the lender might not see it that way.

It's a good idea to get a credit card and run it for a while responsibly for a while and also a mobile phone. Once you establish some track record the best rate loans may come within reach.

One thing you can't be when applying for loan is overstretched financially. Your credit records are there for all lenders to see and they can see immediately what your monthly commitments are and also how you have been handling those commitments. They can also see your credit limits so it's a good idea to cancel any unused credit cards as those low limits could put a lender off you. If other lenders are only allowing a little then why should the new lender have confidence?

It's always best to try to explain why if you have any negative entries in your credit file. A good piece of advice if you are having some financial difficulties is to take advice from a financial adviser before just taking out more borrowing. IVAs, Court Judgements and bankruptcies will stay on your file for at least 6 years and even simple missed repayments will be there for 4 years or more.

Always explain if you have had a problem due to special circumstances. If you have been ill for example and it affected your earnings then you can add this information to your credit report and most lenders will probably take this into account when considering your application.

If you are having trouble getting a loan make sure you stay away from companies who say they can repair your credit record. Unless a serious mistake has been made on your file this is not possible and if a serious mistake has been made then you can easily repair this yourself. Never fall into the trap of paying for credit repair or debt advice which means rescheduling debts.

If you struggle getting credit, the first step is to review your spending and if you are having problems with your debts then get advice from a debt counselling service .

One very simple and quick way to improve your credit rating is to register on the electoral roll if you aren't on it already. Credit reference agency Experian tells us that lenders use the electoral roll as a precaution against fraud, to help check that you are who you say who you are and live where you claim to live. If you are registered at a different address to the one on the application form, or don't appear on the electoral roll at all, they may ask for proof of residence or could simply turn you down.