Online loans ‘fuelling credit refusals’

The number of people being refused credit for a personal loan has surged to 1.4 million – with the use of online loan sites fuelling the total, according to a new report.

Research by an independent financial comparison website found that the number of applications being turned down for personal loans could be boosted by the availability of online loan deals, which rely on electronic forms to check credit ratings.

The site found that, of the 89 possible personal loans available on the market, 31 could be accessed online.

And experts have moved to point out to people seeking a personal loan that while an instant deal online can be attractive, it can also provide an instant rejection – something that will affect future credit ratings.

Sean Gardner, chief executive of the site behind the research, warned: “Loan providers are getting tough so applicants shouldn’t assume that, just because the loan is available online, acceptance is automatic.

“The same rigorous rules apply however you request credit and if you’re rejected too often it’ll be your credit rating that suffers.”

Ways of getting round this include using an online credit profiling tool, which could give an indication of whether a loan offer could be accepted, without the risk of being rejected.

Tags: credit, credit rating, electronic forms, finance, chief executive, use, rejection, personal loan