So, you’ve managed to get your credit score where you want it. You get that warm, fuzzy feeling of achievement as you see the credit rating dial swing way into the green.

But then you apply for a credit card, loan or finance and you get declined. “What’s going on?” Don’t worry, we’ve got the answer!

Having a “good” or “excellent” credit score is also both good and excellent for your financial options and wellbeing. Showing lenders you’re creditworthy will often get you better rates and credit limits.

But it’s not all they look at. If you’ve been declined a credit card, loan or finance but your score is good (or even better!), here are five things that tend to give lenders cold feet.

5 reasons your credit score is good but you’re refused a loan

It feels unfair, right? You’ve got a “good” score but you’re denied a credit card. Or even an “excellent” score and you’re still declined. Don’t despair! We’ve lined up the usual suspects so you can find the culprit and get your finances back on track.

1. Your linked accounts or financial associations ‍

A financial association is somebody who is linked to you financially. This could be your other half or a family member. Somebody you’ve applied for joint credit with. It could also be a current or ex-flatmate who you’ve jointly paid energy bills with.

As a society, we don’t tend to talk openly about money with our friends or family. And so you probably wouldn’t know if they had any previous financial behaviour that a lender may view as undesirable.

If there’s something like a missed payment, default or county court judgement (CCJ) lurking on their credit report, by being financially linked, this could be bringing down your report and actually impact a lender’s decision about you. 

Financial associations can linger on your history indefinitely so it’s really common to find an old flame or roomie hanging around your credit report. It’s not ideal, but you don’t need to panic. If there aren’t any active joint accounts or bills to pay, it’s easy to get them removed.

To remove a previous financial association, just contact the credit reference agency (CRA) that holds that information and ask them to take it off. The three main CRAs in the UK are Experian, Equifax and TransUnion. It’s worth checking with each one to see if they hold any financial associations on your report that the others don’t.

2. Consistency of your employment status and information

When applying for credit, lenders check on you to see whether you’re likely to be able to repay what you borrow. This limits the risk for both you and them. Your credit score lets them know how you have managed your finances in the past. A high score suggests you’ve been creditworthy until now. But it doesn’t necessarily reflect your current or future situation.

As part of a credit search, potential lenders look at your employment status and information. They’re looking at affordability and reliability. But your salary isn’t included in your report. Out of date or conflicting employment details on your three credit reports will be a red flag on your application, regardless of how glowing your score is.

3. Minor negative markers on your credit report

If your credit score is “good” or “excellent” the chances are you’ve already sorted out any of the major negative markers on your report. These include things like CCJs and bankruptcies. If you have any of those in your history your credit score will definitely know about it!

However, there are more minor issues which don’t impact your credit score but still affect a lender’s decision. A minor negative marker could be something like a single late payment. It’s not going to drag your credit score into the mud but it could still be a concern for a potential lender.

All lenders have their own criteria for checking applications, so some will worry about these more than others. You could sail through with a few of them or get automatically declined for just one.

4. Your total existing debt compared to your income

A high credit score suggests that potential lenders will view you as creditworthy. This makes the prospect of lending you credit, loans and financial products more attractive. If you’ve been approved for a few loans because of your high score, it sometimes might not work in your favour. Here’s why:

When a potential lender looks at your income and outgoings — which aren’t shown to you on your credit score — they are likely to check them against your existing debt. If your outgoings are quite high while your incomings are lower than they’d like, it could look to them like you’ve bitten off more than you can chew.

In that case, the lender might think that you will struggle to make your repayments in the future and that you are actually more risky than your credit score suggests. Therefore, your application is declined despite your score being high.

5. All (or some!) of the above

Maybe you have a bad financial association and too much existing debt. Perhaps your salary is listed differently in two records, or you once missed a loan repayment.

It could be tricky to pin down the cause of an application denial but hopefully the above tips will jog your memory or point you in the right direction to find out.

Is it time to give your financial records a spring clean?

‍If you’re still feeling a bit lost, that’s okay — we’ve covered a few common questions below.

I’ve got an Excellent credit score but still declined. What now?

To be as sure as possible that you’re accepted for a loan, mortgage or a credit card, the best thing you can do is check your credit score yourself.

‍If you make lots of applications and are declined more than once in a six-month period, your credit score will take a hit. Remember, hard credit checks cause a temporary dip in your credit score even if you’re at a “good” or “excellent” credit rating.

It’s possible to look at your credit score for free and as often as you like, without making it drop, by using one of these services:

ClearScore (uses Equifax data)*

Experian App (uses Experian data)

Intuit Credit Karma (uses TransUnion data)

*Because we always try to be transparent and helpful, we wanted to let you know that if you sign up for ClearScore here, we earn a little commission.

I was declined for a loan and now my credit score has dropped!

You had a great credit score but you were denied an application. Now you’ve checked your credit score and it’s gone down. This is not the worst case scenario so don’t panic!

Remember, it’s a temporary dip and a totally normal part of using credit. The drop in your score will apply if you’re both declined or accepted for a loan or credit card. Why? It’s the hard credit check or opening of a new account that causes this. Keep an eye on it, continue to use credit responsibly and you should see it go back up after around six months. 

But even if it doesn’t, or you just want your credit score to be higher than it is right now, you can always get started with Loqbox for a proven way to boost your credit score. We offer simple and easy solutions for our members to improve your score while you look after your finances.