What happens if your application is not successful

Not every person that applies for a guarantor loan will be successful. As we work with responsible lenders, they have an obligation to find the right product for the customer and not give them a loan that will cause financial difficulty. So despite your best intentions, your application might be turned down because:

• You have a history of bankruptcy, CCJ or IVA
• Your guarantor does not meet the criteria i.e credit score, income and affordability
• You and your guarantor are not UK residents
• You and your guarantor are not in current employment/earn sufficient income
• You and your guarantor are not old enough to apply

 

So you have filled in the application, found a guarantor and been through further checks with the lender and then your application is not approved. So what happens next?

We explain what happens when your application is not successful although this may vary from lender to lender:

No fees or third party marketers

The guarantor lenders we work with do not charge any fees for applying. They appreciate that if you are applying for finance, you are looking for a loan, so the last thing you want it to pay for simply applying and being charged even though you get turned down doesn’t make a good user experience.

As part of the regulation enforced by the Financial Conduct Authority, our lenders will not pass on your details to multiple third parties so you will not be bombarded with phone calls, text messages and emails from random companies. All the companies we feature are fully authorised by the FCA or have interim permission so they are maintaining the highest standards possible of responsible lending.

You can find a new guarantor

Unless your application has been denied because you do not meet the basic criteria for applying such as age, residence and employment and instead your application was rejected because of your guarantor, your account will still remain open.

Most lenders acknowledge that borrowers for guarantor loans have less than perfect credit scores but having that person to guarantee your application with a good credit score and affordability will significantly increase your chances of being accepted.

So for most lenders, you have up to 45 days to find a new guarantor that might enhance your chances of approval. Once you reach the deadline, you simply have to reapply. There are some lenders like UK Credit that keep your application open-ended, so you can add a new guarantor at any time i.e next week, next month or next year.

Passed onto a closer alternative or sister company

In the event that your application is not approved, the lender may recommend you to one of their sister companies or close alternatives. For instance, they may decide that you weren’t best for their guarantor product but they have another secured option or loan without a guarantor that they can offer or their sister company can provide.

In addition, if your credit scores show a long history of debt and they feel that you have applied for a loan to pay off debt, they may suggest a debt management company. These charities or private firms can help you consolidate your debts so that you can pay off any outstanding finance little by little and eventually become debt-free.

However, it is likely that you will only be recommended to one company and one that the company is closely affiliated to and not thousands of random companies offering irresponsible products.

Application ends and leaves a footprint

Another possibility is that your application simply ends and a message on the screen or email says that you have unfortunately been unsuccessful.

If your application went beyond the initial sign up stage and the lender carried out credit checks to determine your eligibility, it is likely that they will leave a search footprint on your credit file. This is like a stamp that gets put on your credit report lasting 12 months and it is a way of saying that they checked your account.

This footprint is then visible to future lenders or companies that look at your credit file and they will see that you have made an application. For individuals that make several applications in a short space of time, the footprints are a useful way to see how often the person is applying and too many searches suggests that they are desperate for finance and perhaps should not be lent to.

What options do I have?

If you have not been accepted for a loan but are still in need of finance for an emergency expense or important purchase, there are some other low cost alternatives:

Credit builder credit cards

These are credit cards specifically for those with bad credit. The rate are much higher than average cards at around 30% APR to reflect the higher risk of default. But considering that your loan might have been denied due to a credit score, this is an opportunity to get finance you need and if you repay on time, it will help improve your credit score and your chances of being approved for mainstream finance in the future.

Secured finance – home or car

If you have an expensive asset like a car or home, you can release the equity when applying for a secured loan. Whether its a homeowner loan or logbook loan, you can borrow money by putting down your asset as collateral but you will risk losing this if you cannot keep up with repayments.

Credit union loans

Credit unions are charities and not for profit organisations that offer super low-cost loans at around 12.7% (Source: Association of British Credit Unions). This is significantly cheaper to other ways of borrowing a few hundred pounds. The only issue is that it sometimes takes a few days or weeks to receive funds because they are not a savvy internet or high-street lender. To be eligible, you must be part of your local area and work in the public sector such as a teacher, nurse, policeman or street worker.