In this brief guide, we are going to talk about having an excellent credit score but being refused credit.

Excellent credit score but refused credit

Having an excellent credit score doesn’t mean you will be accepted for credit. Credit providers use different scoring cards to determine if they will lend to you and your excellent credit score may not be the only factor which they consider. Below are some other reasons why you could be refused credit with an excellent credit score.

10 Reasons why you were refused credit with an excellent credit score

Recent late payments

If you have had recent late payments on your credit agreements then this could cause you to be rejected even though your credit score may still be “excellent”. Credit providers may take your most recent credit behaviour as very important and hence reject you because of this.

Thin credit history

Some credit providers will have a minimum term they will want for your credit history. Whilst you will usually have a credit history after 3 years in the UK some credit providers may want you to have at least 6 before they will consider lending to you. This means that even with an excellent credit score you may still be rejected for credit.

Error on your credit report

An error on your credit score could quite simply be the reason why you are refused for credit. There are four credit bureaus in the UK and it is unlikely that they won’t make a mistake every now and then. In some cases, a credit account where you made on-time repayments may not show on your credit score. In other cases, it may be that your credit score is displaying incorrect data, may be attributed to someone with a similar name who lives at your address. It may be a small mistake such as a misspelling of your name which means your credit score isn’t displayed when searched from by lenders using that credit bureau.

To ensure that all credit bureaus( Equifax, Crediva, Experian and Transunion) are holding the correct data on you, you should regularly check all four credit bureaus and review your credit file at each.

Some of these credit bureaus may charge you a fee for doing so. Alternatively, you could alternatively request your annual free statutory report from each credit bureau.

You could also use a service like checkmyfile which displays your four credit scores to you for free.

Failed affordability checks 

Another reason why you may be refused credit with an excellent credit score is that you failed the credit providers affordability checks. This could be income and expense checks or maybe you didn’t have a suitable down payment for you to get the credit required. Most lenders do not disclose to you why you weren’t approved for credit but rather refer you to the credit bureau. This, of course, doesn’t always help you but if you have an excellent credit score then you could be refused for credit by simply failing the lender’s affordability checks.

Remember, each lender is different so the affordability checks will differ.

Personal circumstances make you unsuitable

You may also be refused credit if you have an excellent credit score but your personal circumstances make you an unsuitable candidate for credit with that lender. If you are pregnant, don’t have a job or about moving jobs then you may find that many mortgage lenders will be wary of offering you a mortgage.

The credit product has a much higher credit score requirement

In most cases, you were simply refused credit with an excellent credit score because your credit score simply wasn’t high enough for the credit product you were applying for. An example of this could be platinum credit cards which require people with very high credit scores. This means even if you have what you term as an “excellent credit score” you could still be refused for this type of credit.

The product is unsuitable for you 

In some cases the credit product could simply be unsuitable for you and the credit provider will reject you on that basis. Credit providers in the UK have to treat customers fairly as part of their interactions with customers. This means if you apply for a credit product that may be too expensive for you may be eligible for a cheaper rate or more suitable version of the credit provider could refuse you for credit even though you have an “excellent credit score”. 

In most cases, the credit provider may suggest other products in their portfolio for you to have a look at.

This is very common with equity release products where potential borrowers have less costly and better alternatives in the mortgage market to extract equity from their homes.

You have too much credit

Another reason you may be refused for credit even with an excellent credit score is that you simply have way too much credit. Credit providers prefer to lend to people who can adequately manage their credit and if you have too much credit it may seem more likely that you will misuse your available credit and end up in debt.

Too much debt

Another reason why you may be refused credit with an excellent credit score is that you have too much debt Most lenders will not lend to anyone who has a debt to income ratio that is more than 50%. If your debt level is approaching this level then you should consider reducing it to increase your chance of credit approval.

You recently applied for other credit

If you have applied for a credit product recently then this will be stored on your credit file due to the hard credit search that was likely carried out when you made the credit product application. Most credit providers have an automated decision-making system which will reject credit applications from people who have “recently “ made a credit application elsewhere.

This means that even with your “excellent credit score” you may very well be refused for credit. You should try and wait at least a few weeks before making new credit applications.

If you have made too many credit applications in a short time then credit providers may see this as you were desperate and will refuse you for credit. A credit refusal could then go on to damage your credit score.

Negative court judgements

Another major reason why you may be refused for credit even with an excellent credit score is that credit providers may still be able to see bankruptcy records, county court judgement records etc even after 6 years have passed and they are no longer kept on your credit file. There are third party databases which hold datasets such as everyone who has ever been declared bankrupt and the credit provider you applied to could potentially have access to this data.

Fraud marker

Another simple reason why you could be refused credit with an excellent credit score is that you have a fraud marker on your profile. A fraud marker will not necessarily be registered on your credit file and may be on external third part company databases which credit providers use to see if they are willing to lend to you. If your name is registered on any of these databases then your credit application could be refused even with an excellent credit score. The two most prominent fraud databases are CIFAS and national hunter.

Why do I keep getting denied for credit?

There are many reasons why you keep getting denied for credit but one of the main ones could be the fact that you have been given a CIFAS marker. You should perform a subject access request to get all the data which CIFAS holds about you. It will let you know if you currently have a CIFAS marker against your name.

You could also be getting denied for credit because you have made too many credit applications in a short space of time and credit providers think you are desperate and hence won’t approve you for credit.

Does getting denied for a credit card hurt credit score?

Getting denied for credit will temporarily hurt your credit score but it should recover over a month or two naturally. Getting denied for multiple credit applications in a short time may damage your credit score.

Using a credit eligibility checker

If you are concerned about applying for credit then you may want to consider using a credit eligibility checker which lets you know which credit products you are eligible for before you make a credit application. A credit eligibility checker works by taking a soft credit check of your credit file, this means it does not leave any footprints for anybody but you to see and it does not affect your credit score.

What to do if you have been refused credit?

If you have been refused credit you should first ask the credit providers why they refused you. They may give you the actual reason but more often than not they will simply refer you to the credit bureau which they use to get their credit file data.

If you feel you have an excellent credit score and you shouldn’t have been refused credit then you should check all your credit files from all four credit bureaus to ensure they don’t have any errors. You should also check the fraud databases to ensure you are not listed on them. If you find any errors on your credit file or any incorrect fraud database listings then dispute them immediately with the relevant parties.

In this brief guide, we discussed a few reasons why you could have an excellent credit score but are refused credit. If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.