Being turned down for a loan, despite having good credit


Andy Townsend

Written by: Andy Townsend
Head of Marketplace Distribution, Consumer
20th January 2022

If you’re looking into loans, you’ll probably know how important your credit rating is. It’s one of the main factors taken into account when assessing your suitability for a loan. But other factors are considered too, and it’s possible to be turned down for a loan despite having good credit.

You’re unlikely to repay the loan

Even if you’re paying off existing debts without any issues and think you can comfortably take out a loan, this might result in too much unsecured debt that you may not be able to repay. Lenders, such as Shawbrook Bank, have a range of “affordability indicators” which are used to determine someone’s ability to keep up repayments. They tend to look at someone’s disposable income, and if you will be able to meet repayments if your circumstances change.

Being seen as “likely” to repay a loan often isn’t enough. It’s possible to be turned down for a loan despite having good credit because the lender has established that you may not have the ability to repay.

It’s possible to be turned down for a loan despite having good credit because the lender has established that you may not have the ability to repay.

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You’re self-employed or have an irregular income

In 2017, there were 4.8 million self-employed people in the UK. This number is growing, but many banks are still hesitant to lend to self-employed people due to changes in income. Lenders want to know that there won’t be any issues with loan repayments, which is why people with irregular incomes, or those who are self-employed may struggle to get approved, even if they have a history of paying debts on time.

If this applies to you, the best thing to do is keep detailed and accurate records. You’ll likely be asked to prove your income and outgoings for the past two years, along with evidence that your earnings have been declared to the HMRC. At Shawbrook Bank, we take personal circumstances into account when assessing your suitability for a loan, and can lend to the self-employed, but you should also consider shopping around to find a lender that suits you.

Your credit file contains inaccurate or incorrect information

Although uncommon, it’s possible to have a good credit rating but be turned down for a loan due to errors on your file. For example, if you received a County Court Judgement that was settled within the required time, it shouldn’t show up on your record – but there may be an administrative error in removing this. You may also find that there’s no electoral roll information on your credit file, even though you’re registered to vote at your current address.

If you’re considering applying for a loan, it’s worth proactively checking your credit file to ensure there aren’t any inaccuracies. If there are errors, you will need to dispute them. The easiest way to do this is to contact the organisation that registered the data and ask them to update this. Alternatively, you can get in touch with the credit reference agency (such as Experian, Equifax, or Callcredit) and raise a dispute with them. The Information Commissioner’s Office have detailed guidance on this if you’d like to find out more.


Although a good credit rating is an important factor in securing a loan, it is important to take into account other aspects that may affect your ability to obtain credit. Shawbrook Bank offer a straightforward personal loan application process, with a guaranteed rate upfront before you apply. We also take your personal circumstances into account when making a decision on your loan, and as we only do a “soft credit search”, there will be no impact on your credit score. This can help when you’re weighing up your options and looking for a loan that’s right for you.