Why was I refused for a career development loan?

Q I recently applied to both the Royal Bank of Scotland and Barclays for a career development loan; both turned me down on the grounds that I don't score highly enough on their credit-scoring systems.

But they won't tell me why. I have spoken to Experian and Equifax who assure me - despite one default now fully paid off - that there is nothing wrong with my credit report. I have a Barclaycard and a mobile phone account that show up on my credit report - both within their credit limits and paid on time each month. I have an existing loan and have never missed a payment in the last four years. I pay all my utility bills regularly each month via direct debit. I have lived at my current address for more than six years and was working until I was made redundant last year.

I appealed to the Royal Bank of Scotland pointing all this out, but to no avail. I understand that the bank's lending scoring systems are confidential - but surely someone, somewhere should be able to tell me which criteria I don't meet? How can I put it right if I don't know what is wrong? I have even tried asking staff at my bank but they are unable to give me any idea of the reason either.

This is not only a short-term concern. If I am unable to get credit now, how on earth can I expect to get a mortgage when I start working again?

RM

A First of all, lenders use different scoring systems across their range of credit products, so a declined application now does not mean you will be unable to get a mortgage in the future.

If your credit records are clean and you've been at your address for six years, the other major contributor to your credit score is whether or not you're on the electoral register. This is usually the first port of call for lenders so if you're not on the register, get on it. Councils are now updating their registers on a rolling basis, rather than annually, and Experian and Equifax are supposed to update their records to reflect this on a regular basis.

These two lenders' scoring systems may have been prejudiced against your student status, or concerned that your lack of an income would make repayment of the loan difficult for you. Also, although it has since been paid off, it is entirely possible that your past credit default has worked against you - it really depends on how long ago it happened.

Unfortunately, you will not be able to convince either bank to give you a reason for failing its credit score. Lenders say credit-scoring systems are 'corporately sensitive' material, though I suspect they use this as an excuse to cherry-pick customers. Either way, I'm afraid there isn't anything you can do other than apply for a loan elsewhere.