It is not surprising to hear of many customers being turned down when they apply for a loan from one of the many UK lenders in these times of economic uncertainty.

In the past few years, banks and credit card companies have come under fire for forcing loans on consumers and raising the credit limits without being asked to do so.

However, many of the consumers who have received letters by mail telling them that they qualified for a loan are surprised to find that when they do apply now, they have been refused and ask why this is so.

As banks are left with bad debts due to borrowers’ inability to pay, they have become more discerning about the consumers for whom they approve loans.

The best deals with the lowest rates of interest are reserved for the lenders’ best customers who have repaid their loans regularly in the past, have not missed any payments and who do have an income to support their debt to income ratio.

According to the largest credit card company in the UK, Barclaycard, bad debts assumed by the lender have risen to £696 million – 33% more than it was in the past.

Every customer that applies for a loan undergoes an application process. This involves using information gained from the borrower’s credit record and application to calculate a credit score. The number of this credit score will determine your eligibility to borrow money. It is also important to keep in mind that different lenders use different criteria to arrive at this score so that while you may not qualify for a loan from one lender, you may from another.

If you do not have an established credit record, you will find it difficult to gain approval for a loan. This is because the lender does not have any information on which to base your payment records in the past and is one of the main reasons why first-time borrowers are turned down for a loan.

According to Jill Stevens, the affairs director at Experian, one of the credit reference agencies, “If you have no track record, they cannot tell how you might behave in future and could mark you down because they have no evidence of your being someone who manages credit well.”

For those with no credit records, it is essential that they look at taking out a credit card or store card and using it for a small amount of money. When you start making regular payments, then you will establish a credit history and lenders will be able to calculate a credit score based on this information.

Applying for too many loans is very harmful to your credit record and will have a direct impact on your ability to take out a loan. When lenders take a look at your record and see that you have made several applications within a short period of time, they will assume that you are in financial difficulty and will turn down your loan application.

If you have had financial difficulties in the past and have missed or late payments on your record, you will also encounter difficulty in being able to borrow money. When this information comes to the attention of a potential lender, you are seen as a poor risk to repay.

In these uncertain economic times, lenders want to minimize their risk and will therefore turn down your application. It is important to keep your payments up to date and repay your debts if you hope to be able to borrow money in the future.

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