Almost nine out of ten consumers that have been refused for credit cards or loans feel that they are not given a proper explanation as to why the application has been denied.
The findings from a YouGov survey show that 86 per cent of consumers believe they should be offered clearer explanations when lenders decline applications for products such as mortgages, loans and credit cards.
Credit industry guidelines actually require lenders to tell credit applicants the main reason for any credit refusal, but only if the applicant requests the information.
The research also revealed that 78 per cent of UK adult consumers surveyed felt that lenders should give guidance on what the potential borrower could do, in order to improve their chances of obtaining the required credit in the future, whenever a credit refusal is received.
Despite much publicity about credit scores, the survey also revealed that over half of UK consumers have never checked their credit score, regardless of the fact that this can now be checked at no charge.
Three quarters of potential borrowers also mistakenly believe that a credit refusal will automatically have an impact on their credit score.
The credit decision-making process is also misunderstood by many, with more than a quarter of UK consumers believing that credit reference agencies make the decisions to either accept or turn down applications for loans or credit cards.
In fact, the decision rests completely with the lender that has been applied to, with credit agencies simply providing information to help the lender come to their decision.
Head of consumer affairs at Experian, James Jones, commented: ‘It?s alarming to see so many people in the dark when it comes to credit refusal and credit scores. Some lenders do volunteer the main reason why they refused credit but this is probably not the norm. Access to affordable credit is an important issue and we really want to help people take more control so they can improve their financial future.’
You can find many tips and guidelines to help improve your credit score on this website.