You’ve taken your time and researched your next car subscription in great detail, you’ve followed the instructions on the website, submitted your driving licence and filled in the forms.
Then the dreaded email comes through… DECLINED!
So today, we’re going to take a look at the 9 reasons why you may have been declined on a car subscription.
1. You’re Not on the Electoral Roll
If you are not on the electoral roll, many of the subscription suppliers won’t be willing to pass you on your credit. They need to know where you are residing and where you have lived previously. Some of the companies may ask you for the last 3 to 5 years worth of addresses, to show there are no hidden surprises.
2. Too many applications
If you have applied for a lot of credit recently, these will all show on your credit report. Every application for a credit card, interest-free loan or even car finance will make a mark on your record, even mobile phone contracts. The more you have showing, the less likely you are to be accepted.
3. Scores Differ
If you subscribe to one of the credit reference agencies such as Experian, Equifax or Transunion and you’ve got your score, this may differ from what the car subscription company can see. This is because every lender will have a different formula to calculate your score. So what might be a 900 on your Experian App, might only be a 700 with the lender.
4. You have no credit history
Yes it does happen, many people can go through life without borrowing a penny. Whilst you may think that it will be attractive to the various lenders, they have no record of you making payments and managing your credit commitments.
Our suggestion is to take out a credit card, use it for your food shops and pay it off in full every month. After 6 months you will have already started to build up a credit history.
5. You’re moving too much
If you have moved residencies too many times this can have a huge impact on your credit status. Lenders will want to see your last 3-5 years worth of address history, multiple changes in addresses will show lack of stability.
6. Changed jobs lately?
We have just touched on stability, lenders will look at how long you have held your current job role. If the car is for a new job role, you may have to explain your employment history for the last 3 to 5 years. Employees references can sometimes be used.
7. Blown the budget
You’ve seen an amazing car, and you think you can afford it with a few Netflix cancellations or dropping the daily latte, but lenders may feel that you have overstretched your budget. Along with the vehicle rental, lenders may look at your incomes and outgoings, they will use a calculation to see if you have enough to cover the car, the running costs and have spare money for daily essentials.
8. Missed a few payments
If you’ve missed one or two payments in the past, then this can have a massive effect on your credit history and subsequent score. Even worse if it’s got to the point of County Court Judgements (CCJ). Very few vehicle subscription providers will deal with those that can’t manage their credit commitments, but it might be worth having a look on our bad credit page.
9. You haven’t checked your credit report
Lenders will always look at your credit report o get an overall idea of how you manage your credit commitments. They need to ensure that you can afford the monthly payments of a vehicle subscription.
It is really important to you, that the information on your credit report is accurate and up to date. An incorrect address, an error with a lender or even a name change can all have a detrimental effect.
We’d suggest getting your free report from Experian or Equifax and checking for any errors. If you have found any errors, make sure these are corrected before re-applying for a car subscription again.
Summary
Even if you have got good credit, the lender can still say no. There are many reasons why a company may turn you down. If you have been turned down recently and we haven’t covered the reason above, drop us a line and we will try and answer it.
