Have you got a 999 credit score but been refused a loan?

Your credit score is a three-digit number that indicates the likelihood you’ll repay a loan. It gives you an idea of how your credit history looks to lenders; the higher the number, the better.  

In the UK, there are three main credit reference agencies – Experian, Equifax and TransUnion. They use your account history, payment record and credit application history to calculate your credit score. Your score might be different with different credit reference agencies.

You can check your credit score and assess your rating for free using these sites: 

• ExperianOpens in a new window, which has a paid subscription as well as a free service 
• ClearscoreOpens in a new window for Equifax
• Credit KarmaOpens in a new window for TransUnion.

Different agencies have different maximum credit scores and definitions of an ‘Excellent’ credit score.

A credit score of 999 from Experian is the highest you can get. It usually means you don’t have many marks on your credit file and are very likely to be accepted for a loan or credit card. However, a high credit score doesn’t guarantee your loan will be accepted.

After receiving your credit application, lenders perform a hard credit check. This is a full search of your credit report, which contains your credit history. For example, if you have a history of debt or late payments, this will appear on your credit report.

By comparing your income, debt-to-income ratio and bank statements with the amount you’re asking to borrow, lenders can work out how risky you are to lend money to.

However, applications with no negative marks on their credit report may still be refused a loan. There are a few reasons your application might have been rejected, including:

• having a short credit history – it can take time to build a solid credit history 
• applying for too much credit in a short time – hard credit checks are recorded on your credit report, and having too many can negatively affect your application 
  
• being financially associated with someone with a bad credit history – this could be because you’ve shared a joint account or credit application 
  
• having missing or incorrect information on your credit report – for example, not being registered to vote or having different addresses for your existing bank accounts and the electoral register.

If your application has been rejected, you can contact the lender to find out why. They may not offer a reason, but they should tell you which credit reference agency they used. You can then request a free credit report from that agency to understand why you were refused the loan, which may help you strengthen future applications.

There are plenty of ways to improve your credit score and boost your chances of loan approval in the future.

• Ensure all your information is accurate.
• Make sure you’re registered to voteOpens in a new window at your current address.
• Report any fraudulent-looking activity – find out more in our blog, How to report a scam or fraud.

• Open and manage a current account responsibly, sticking to any agreed overdraft limit.
• Pay your bills on time; consider using Direct Debits to avoid missed payments.
• You could apply for a credit builder credit card and pay it off in full each month.

• If you’re a renter, include your rent payments using Experian’s Rental ExchangeOpens in a new window in your credit report.
• Consider the optional Experian BoostOpens in a new window scheme, which uses ‘Open Banking’ data (e.g. payments for Council Tax, subscriptions and savings accounts) when calculating your credit score.

The more evidence that shows that you manage your money responsibly, the more attractive you will look to lenders.

Think carefully before applying again immediately after being refused a loan, especially if you’re using it to pay off outstanding debts or think you might struggle to repay it.

Short-term ‘payday loans’ are typically high-interest and may be difficult to repay. Ensure you’ve explored all alternatives beforehand.

Loan sharks target those struggling to borrow from regulated lenders. Always check that the lender has been authorised by the Financial Conduct Authority (FCA)Opens in a new window

Saving money can be a better option if you don’t need an immediate loan. However, there are other ways to secure funding quickly in an emergency. 

• Peer-to-peer (P2P) lending – connects people and businesses who want to invest and those who want to borrow without going through banks or building societies.
• Credit unions – help individuals who require financial assistance, offering loans at low rates.
• Community Development Finance InstitutionsOpens in a new window – offer loans to those rejected for credit from banks. They tend to offer higher interest rates than credit unions.
• Employer salary advance schemes – give employees access to their earned income early through short-term loans paid back through your paycheque.

Before making another application, ask yourself whether you really need to borrow, if you can afford to repay the debt, and if you could wait and save up instead. If in doubt, read our guide to borrowing.

There are many benefits to having a high credit score beyond being approved for loans. If you have a high credit score, you might gain easier access to credit and better rates on credit cards, mortgages, mobile phone contracts and insurance plans.

It’s important to keep your high score credit if you’re waiting to be accepted for a loan. To keep a good credit score, continue the same financial habits that helped you achieve your high credit score in the first place: spend wisely, save where possible and stay up to date with bills.

If you’ve been refused a loan, it’s important to think carefully before applying again to avoid damaging your credit report.