Being turned down for a loan or a credit card can be a frustrating and distressing experience. Lenders are usually reluctant to let you know exactly why you failed their application process, but the usual reasons for rejection include being completely new to borrowing or having a history of late or missed bill, loan or credit card repayments, defaults, bankruptcy, CCJs, IVA or other current or past credit problems. 

Even if you have been turned down, it's worth persevering as contrary to popular belief there is no such thing as a blacklist. Each lender has their own way of credit scoring meaning that if one lender turns you down, it's possible that another will accept you.

Although lenders each have their own credit scoring process, most rely on information from the UK's three credit reference agencies -  Experian, Equifax and CallCredit, which keep files on every UK citizen's borrowing and payment habits. These reports include details of which accounts you have, how much credit you have outstanding, where you've lived for the past few years, whether you are listed on the electoral roll, county court judgements (CCJs) registered against you, as well as information about how many times you have missed payments on loans, bills or cards.

Clean up your credit score - There are a few steps you can take to ensure that your credit file looks as attractive to lenders as possible.

One popular myth is the credit reference agency makes the decision. All they hold is data which enables a lender to perform a credit check, but they are not party to the decision.

A decision by a lender to refuse you credit is not recorded on your file. Instead what is recorded is the fact that you applied. Because of this, it's not wise to make lots of applications in a short space of time, as this can give the impression of desperation.

It is advisable to check your credit file periodically, not only to avoid unpleasant and inconvenient shocks, but because lenders increasingly tailor the interest they charge to your individual creditworthiness.

If you find an inaccuracy you have a statutory right for it to be corrected. If there is a disputed transaction on the file, you have the right to add a note which will enable you to explain your side of the story.

If you are among the estimated one in four of the adult population in the UK who has experienced some form of adverse credit history during their lifetime,  there are a select number of credit card and loan providers who will  consider offering you finance without charging exorbitant rates of interest in the process.

So if you have a history of payment arrears, County Court Judgements (CCJ), or bankruptcy, don't despair - this is your chance to rebuild your credit rating while enjoying the convenience of using credit.