A new study has revealed that many people, particularly the young, are damaging their credit score by repeatedly applying for credit.
The study by uSwitch found that almost one in three people who have applied for credit were turned down. That jumps to a whopping 57% of people aged between 18 and 34. And it’s younger borrowers who are most likely to apply for credit multiple times, with 65% turned down more than once and 25% having been rejected more than five times.
As a result uSwitch reckons more than a million people are trapped in a vicious circle of applications and rejections, pushing them into the arms of payday lenders and pawn brokers.
Hurting your credit score
Applying for credit multiple times is not a good idea, as each application appears on your credit report. Put yourself in the position of the lender. If they see your credit report, and you’ve applied for four credit cards in the last month, you aren’t going to look like a responsible borrower, are you? It looks like you are desperate for credit, like you’re struggling to manage your money. And most lenders aren’t going to want to lend their money to a borrower like that.
It’s a much better idea to apply for one product at a time. If you are rejected, go back to the lender and find out why. It may be something simple, like an error on your credit report that can easily be fixed.
Check your credit report for free
[SPOTLIGHT]Almost half of the young people surveyed by uSwitch didn’t check their credit record before their failed application.
There are a number of credit report agencies which offer you the chance to see your credit report. Most offer an initial free trial, so you can take a look at what the banks see when you apply for credit and take steps to improve it.
Head over to our credit report comparison centre to see which agencies are offering free trials at the moment.
What damages my credit report?
There are all sorts of different things that a lender might be troubled by on your credit report. There are some that you can’t really do anything about – missed or late payments stay on your credit record for six years, so you just have to wait for that particular black mark to disappear.
But there are plenty of others that you can do something about. For example, one way that a lender checks you are who you say you are when you apply for credit is to check the electoral register. If you aren’t on there, or you’re registered with an old address, the lender will worry whether this is a fraudulent application. So make sure you get those details up to date.
Check out our guides on What damages your credit rating and How to repair your credit rating.
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