I have a good credit score, why was I rejected

I have a good credit score, why was I rejected?

Last updated: 28 August 2018

There are several situations in which your credit application will be declined by the lender even if you have a good credit score. We explain why that might be, and what simple steps you can take before you try to apply for credit again.


#1 Your debt-to-income ratio is high

Your debt-to-income (DTI) ratio indicates the percentage of your income that goes toward paying your debt each month. When taking into consideration your income and your existing debts, a high ratio could be marked as a red flag for lenders because you might struggle to make your repayments, as more of your income is spent on repaying back debt, leaving you with less money to spend on other bills or to save.


Savvy Tip: Take proactive steps to reduce your DTI ratio by paying more than the minimum balance every month to help pay off your debt faster or find ways to increase your current income (without simultaneously raising your debt payments).


#2 Your last black mark was too recent

Did you know that there are different types of negative events and they can stay on your file for a minimum of 5 years even if you have settled it?

A recent black mark has a higher negative impact on your application in comparison to another that you’ve settled a few years ago, as lenders might view that you are currently unable to manage your finances or that you’re currently struggling to make your repayments on time.


Savvy Tip: Pay your bills on time, every time. Set up a reminder or a direct debit so you never miss a payment. You can also find out how long the information stays on your credit file in our blog post.


#3 Your income has changed

Although your income doesn’t affect your credit score, it does affect your eligibility to apply for a credit product. As credit providers have their own scoring system and certain credit products have different eligibility criteria, you might not get approved if you recently had a change in income.


Savvy Tip: Always read the eligibility requirements before applying for a credit product to make sure you meet the minimum requirements.


#4 You have a short credit history

Having a good credit score is an indication of your credit worthiness, but lenders also take into consideration how long you have been credit active and if you have demonstrated good repayment behaviour for those established credit accounts.


Savvy Tip: If you have a short credit history, keep up with the responsible credit management behaviour and you’ll see your positive credit history gradually build over time!


It’s always a good idea to request a copy of your credit report from all three credit reporting bodies and review the information listed. This can give you a more complete picture on what’s behind your score, to help identify possible errors that you’re not aware of that may be affecting your score and your application. But remember, lenders may use factors other than just your score to assess your eligibility.


Here at Credit Savvy, we offer free and complete access to your Experian credit score, credit report summary and all the other resources to make sense of them both – sign up for free today!