Why loan applications get declined and what to do next
Here, we look at:
Having a loan or credit application declined can feel worrying, but it doesn’t always mean you can’t borrow in future.
What do lenders look at?
Lenders look at several factors before they approve your application, such as:
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Your credit reference agency (CRA) credit score
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Your eligibility for a product
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Any other credit agreements you already have in place
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Your electoral role information
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Any missed repayments
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Any county court judgments (CCJs), bankruptcies, or debt solutions you may have (in the last 6 years)
Lenders will complete a detailed creditworthiness (using credit scoring PDF 165KB) and affordability check when an application is received.
These assessments use a range of information, including:
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Information from the application form
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Internal data (if you have a banking relationship with the lender)
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External information gathered from CRAs
They may also look at your current finances and anyone who is financially linked to you.
Why has your loan application been declined?
There are several reasons why a lender may have declined your credit application:
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You may not fit the eligibility criteria
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You may not have a substantial credit history
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You may have missed payments on current or previous credit commitments
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You may have a poor credit score
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You may not have passed the minimum internal credit score that the lender requires (using credit scoring)
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You may not have passed the affordability assessment
The reason your application was declined can help you see what to do next. You might need to make changes or find a product that’s a better fit. Always check your details carefully, as small mistakes can affect the result.
Does a refused application appear on your credit report?
The fact you’ve been declined, and the reason for the decision, won’t be reported to the CRAs. However, a hard credit check will appear on your credit report. Other lenders will be able to see that you applied for credit.
A hard credit check can stay on your credit report for around 12 months. A lender will always ask for your agreement to continue before completing a hard credit check.
Making multiple credit applications in a short time may make lenders think that you’re experiencing money troubles. This may affect your ability to be approved for credit.
Some lenders may make you wait before you can apply again.
Soft credit checks are recorded on your credit report, but other lenders can’t see them. A soft credit check is a high-level view of your finances. It shows what you may be eligible for when it comes to lending.
Explore: Hard vs soft credit checks
How to increase your chances of being approved by a lender
The lender should be able to explain why your application was declined and advise you on what to do next. Here are a few things you can do if you are refused a loan:
Improve your finances
It’s important to look at ways to improve your financial situation. You may want to clear any debts or think about how you can start saving money.
You can also book a financial health check with a member of the financial wellbeing team, who can offer support. You don’t have to be an HSBC customer to benefit from this service.
Check your credit report
Checking your credit report can give you an insight into your borrowing history and allows you to see whether the information it holds is correct.
You can access your credit report through one (or all) of the CRAs.
Improve your credit score
There may be things you can do to improve your credit score. This can help increase the likelihood of being approved for credit in the future.
Don’t keep applying for credit
Be cautious when agreeing to a hard credit search. Multiple hard credit searches in a short space of time could be seen as a sign of financial difficulty to a prospective lender.
Where to get help if you have been declined for lending
If you have been declined lending and are worried about money, you are not alone. If you bank with us and need support, please get in touch.
If you (or someone you know) is anxious about money or feels overwhelmed with debt – there’s help available. StepChange and National Debtline provide free advice and support to help you tackle your debt.
Can you get a loan with bad credit?
Some lenders are willing to lend money to people who have a low credit score. However, these options will typically have higher interest rates and may carry additional fees.
There are different types of loans, which can include lending via:
Credit unions
A credit union is a self-help co-operative whose members pool their savings to provide each other with credit at a low interest rate.
Community finance
Community finance is a way for people to help each other find innovative financial solutions.
HSBC doesn’t offer credit union or community finance loans.
It’s important to always check if a lender is listed on the Financial Services register to avoid loan sharks who operate outside of the law and often target those in financial difficulty.
If you’ve been threatened by a loan shark or are at risk of harm, contact the police straight away.
This article was last updated: 02/07/2026, 06:23
