Why do lenders decline loans for bad credit?

Lenders may decline bad credit applications if they believe repayments could be unaffordable or if there’s a history of missed payments. Each lender has different approval criteria, but the most common reasons for rejection include:

  • Poor credit history: If you’ve missed payments in the past, your credit score may indicate a higher risk of future missed payments or even defaulting on the loan

  • Affordability concerns: Lenders assess whether you can realistically afford repayments – if they determine that a loan might put you under financial strain, they may decline the application

  • Existing debt levels: If you already have multiple outstanding loans or a high level of debt, lenders may see this as a risk factor

  • Limited credit history: Having little or no credit history can make it harder for lenders to assess your ability to manage repayments

At Moneyboat, we assess every application on its own merit. A lower credit score doesn’t automatically mean a rejection. We may consider additional factors, such as bank statements or payslips, to determine if a loan is manageable for you.

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Representative Example: Borrow £400 for 4 months: 3 monthly repayments of £156.09 followed by a final repayment of £156.07. Total repayment £624.34. Interest rate p.a. (fixed) 288.35%. Representative APR 1,267.9%. 

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Warning: Late repayments can cause you serious money problems. For help, go to www.moneyhelper.org.uk.