Whether you apply for any type of credit, such as a credit card, loan or mobile phone contract, your success with will depend on your individual circumstances and the lender’s eligibility criteria.
If you're looking to boost your chances of approval, there are several things you can do to make yourself more attractive to lenders. We look at some less obvious ways you can improve your eligibility, that you might not have heard about.
When you apply for finance, the lender will check your credit report to see how well you’ve managed your finances in the past – and they’ll also look out for any mis-matched information.
If there are any discrepancies or errors on your credit report or application form (such as an outdated address or a missed payment that’s been logged in error, for example) this can be a red flag for lenders.
So, before you apply for finance, it’s always worth checking your credit report with all three credit reference agencies - Equifax, Experian and TransUnion.You can do this for free and it won’t impact your credit score. You can also check your Equifax credit report for free (for life) through our member-only platform, CredAbility.
If you spot any mistakes, make sure you contact your lender (and the CRA if you wish) as soon as possible to ask them to update your credit file.
Lenders normally check the electoral roll to see if you have a stable address and to make sure you are who you say you are. If you’ve lived at the same address for several years, this should improve your eligibility for credit (as well as your credit score). It shows that you’re both reliable and contactable.
So, if you're not already on the electoral roll, simply head to the government’s website to register to vote.
Bear in mind, in England, you must be 16 years or over to sign up. You must be either a British, Irish or EU citizen with a permanent address. Or a Commonwealth citizen who’s permitted to enter or stay in the UK.
Unlike mortgage payments, rental payments aren’t automatically included on your credit report, but you can get them added by joining The Rental Exchange Initiative.
This is a good way of building up your credit history - as long as you always pay on time. This should work in your favour and increase your eligibility for credit in the long run.
There are two ways you can sign up:
1. Ask your private landlord or social housing company to report your payments on your behalf
2. Report your payments directly through CreditLadder or Canopy
Note, you can report your rental payments to one credit reference agency through CreditLadder for free. To report to all three credit reference agencies that lenders use, it costs £5 per month.
A standard plan with Canopy is free and allows you to track your rental payments with Experian, but a paid plan is £4.99 per month and this allows you to track your payments with both Experian and Equifax.
Although your monthly income has no direct bearing on your credit score, it does show a lender whether you have room in your budget to afford credit repayments. It can influence a lender’s decision about whether to give you credit, and it can also affect the credit limit that they offer you.
Read on for inspiration about how to start a profitable side hustle to boost your income.
As well as increasing your income, you can also increase your affordability by reducing the amount of debt you already have. When you decrease the amount you owe in relation to how much money you have coming in, you’ll gain a more favourable debt-to-income ratio - and improve your credit eligibility as a result.
To improve your chance of gaining credit, you could consider transferring your debt to a cheaper financial product or paying a little more towards your balances each month. Read on for how to consolidate debt.
Your credit utilisation refers to how much of your existing credit limit you currently use – which could include products like your combined credit card and overdraft limits. To ensure you appear as low risk as possible to a lender, it’s a good idea to reduce your spending to within around 25% of your allowed credit limit.
For example, if you have two credit cards with a combined limit of £3,000 on it, try to reduce the amount you owe to £750 or below.
And finally, look to reduce your existing outgoings where you can. It’s always a good idea – and often refreshing – to sit down and assess all your monthly outgoings occasionally. Maybe download a monthly bank statement and keep an eye out for any monthly outgoings that you may have forgotten about, or just don't need anymore.
This could be a TV subscription, a window cleaner, or a gym membership – £10 a month here and there soon adds up.
All these changes could go a long way to improving your eligibility.
Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
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