New research by the loan provider ‘Market Financial Solutions’ has confirmed that up to 1 million higher-rate tax payers have been turned down for an unsecured loan or credit card, because of a poor credit score. That is, despite them having assets that more that cover the amount they wish to borrow.
The results based on 2000 people said Londoners were the worst affected, with up to a third turned down due to poor credit history, more than double the UK average.
The survey highlights the importance of checking and maintaining your credit score to ensure that you are the best borrower you can be, even if you are a high earner or especially wealthy. Your credit score is based on your previous dealings with lenders and financial institutions, anything from mortgages and unsecured loans to mobile phones. It details all information regarding missed or late payment and lenders use it to assess how ‘risky’ you are when deciding to lend to you and perhaps most importantly at what interest rate. Credit reports do not take into consideration any information in relation to investments, savings or account balances. So, even the richest individuals are often turned down for borrowing as they have little or no credit history. Indeed, the UKs top earners worth 1.32 million could have failed to get accepted for unsecured loans and borrowing.
The survey also claims that 818,000 of people within the country’s top earning 12 % have been refused a mortgage, be it a first, second or buy to let within the past 5 years. 8% or those with more than £250,000 worth of investments were caught out by a poorer credit rating and were thus turned down when applying for a mortgage. Now 31% or Brits have stated that they are fed up with the whole credit application process, with those in the North East and London the most incensed. Indeed those high earners are not the only ones that struggle to gain access to credit. Almost a third of 18-24 year olds have also reported difficulties when applying to mainstream lenders for credit.