Learning that your recent loan application has been rejected is pretty hard to take. It often means you have to return to the drawing board and is likely to change your plans in some way. However, it’s important not to get too downhearted, as it’s not the end of the world. With that in mind, let’s take a look at what you should do if a recent loan application that you made was rejected.

Don’t panic

There’s no doubt that being rejected by a bank, building society, or loan provider can be demoralising. But it’s crucial not to panic. The worst course of action you can take is to start applying to every lender that you come across, as this will cause your credit score to take a big hit. In turn, this will negatively affect your long term chances of being approved for credit. We’d also encourage you not to apply for a payday loan. Although they’re readily available, payday loans are characterised by huge interest rates, often in excess of 1000%. Even if they get you out of a tight spot in the short term, they will probably leave you in a sticky financial situation going forward.

“If you’re exploring next steps after a declined application, Tibi’s borrowing advice centre is a valuable resource for comparing lenders and strengthening your next submission.”

Look for other lenders

Before sitting down and firing off a new loan application, take the time to research the market and look for other lenders. After all, there are lots of reasons why your application might have been rejected by a bank or building society, and there are lots of other lenders to apply to. We’d also encourage you to use an eligibility calculator before submitting a new application. This protects your credit file and helps you identify potential avenues of credit that you can apply for.

Consider alternative forms of credit

It won’t surprise you to hear that there are multiple ways of borrowing money. So, if you’ve not had any luck when applying for a specific line of credit, consider an alternative approach with your next application. For instance, if a recent credit card application has been rejected by the bank, why not consider applying for a personal loan from a third-party lender like Koyo? The key is to realise that there are lots of options available to you, so don’t confine yourself to one form of credit over another.

Work on your credit score before re-applying

If you think that your credit application was rejected because of your credit history, you will need to work on your credit score before submitting another application. This is because most lenders rely on your credit score for their decision. There are several ways to improve your credit score, including:

• Register to vote.
• Make all of your regular payments on time.
• Check for errors on your credit score and correct them.

You should also check your credit score before submitting a new application so you know where you stand and what your likelihood of approval is.

Final thoughts

The key thing to remember is not to panic if your credit application is rejected, as there are still plenty of options to consider. We’d recommend checking out an Open Banking lender, as they’re less likely to rely solely on your credit score when assessing your application, and they will take your current financial circumstances into account.

With all the complexities and challenges of handling your finances, you might wonder if there’s a simpler, more efficient way to do so.

The answer: effective financial planning.

In this article, you’ll learn why financial planning is key to a more reliable and rewarding financial outcome.

But first, you’ll understand why a financial adviser is crucial to help you develop this plan.

Why seek financial advice?

With financial planning being pivotal to successfully managing your wealth, you must ensure you develop and refine the best plan for your circumstances.

This is where a financial adviser comes in.

Your chosen expert will ideally come with a great deal of experience in the world of finances, and will be keen to understand your current circumstances and any concerns or obstacles you might be facing when it comes to planning your future.

Your adviser will help you create a financial plan that’s tailored specifically to your unique financial circumstances, as well as the particular short and long-term goals you have.

So whether you’re looking to develop your investment portfolio, plan for your retirement, or gain financial security, an expert financial adviser can be crucial when financial planning.

Why is financial planning important?

Effective financial planning is vital to help you manage both your present and future finances. There are various reasons for this, some of which include:

• Achieving your financial goals

Financial planning can help you achieve all your short and long-term financial goals.

Your financial journey is much like anything else – the more well-devised and expert your plan is, the more success you’re likely to have in your efforts.

Every individual has different goals, which is again why a financial adviser can help you refine them to align with your current circumstances.

For example, you may be approaching your retirement, and are hoping to retire at a certain age with a particular amount in your pension pot – enough to sustain your dream retirement lifestyle.

These few simple goals alone come with many things to consider, so you need both an expert approach and advice to help you understand how manageable these goals are, as well as the specifics involved.

A financial plan ensures you have all the necessary steps laid out clearly and accurately, to show you what you need to do to achieve your unique financial goals, and how long this may realistically take.

• More effective investment strategies

Investing is a core component of many of our financial journeys, and this is why financial planning can help to identify more appropriate and potentially profitable strategies.

Change can happen in every area of the financial world, and your wealth’s resilience is likely influenced by a range of factors. These can be external such as inflation and how markets perform, and changes to your own circumstances such as a higher income or when you are approaching retirement.

Therefore, financial planning and investment management – preferably aided by a financial adviser – will ensure effective monitoring, evaluation, and adjustment of your investments, according to both your goals and the factors that influence their outcome.

Using the above example, for instance, you need to ensure you’ve contributed enough to secure your desired retirement goals. You may ask:

• Do you have enough invested to fund your lifestyle?
• Have you factored in tax allowances, structuring your contributions and withdrawals for tax optimisation?
• When will you be able to secure your return on investment?

With a clear financial plan, you can strategically execute your investments and contributions appropriately in line with your financial goals.

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As you can clearly see, financial planning is one of the most crucial components when it comes to achieving a favourable financial outcome. Moreso, if you want to develop the most accurately tailored and effective plan, you should seek financial advice.

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Please note, the value of your investments can go down as well as up.

When it comes to the worlds of consumer and fintech, Buy Now Pay Later is the phrase on everybody’s lips. The development is in the news as much as the cost-of-living crisis, and the two concepts have some synergy, with some people now relying on it to pay for daily essentials.

But what is Buy Now Pay Later (BNPL), how does it work and does using it have any impact on a good credit score in the UK? Here the experts at MustCompare reveal the ten things you must know.

1. What BNPL is, in a nutshell

Buy Now Pay Later does exactly what it says on the tin. It is a form of financial technology that lets people buy goods now and pay for them later. Typically, it can be found as an option at a retailer’s website checkout when shopping online.

Many retailers offer at least one type of BNPL to customers on various terms, such as pay in three or pay in 30 days.

2. The popularity of Buy Now Pay Later

The explosion in e-commerce during the Covid-19 pandemic propelled BNPL into mainstream popularity, although it had been around for years, along with a sharp increase in Buy Now Pay Later apps in the UK.

As of August 2022, it is estimated around eight million people in the UK owe money through borrowing in this way, according to a report completed by reference agency Credit Karma. The total amount owed at that time was £4.14bn.

Citizen’s Advice has also found that one in 12 people use BNPL options to cover daily essentials. The same research found that two-fifths of customers then had to borrow money or take out a payday loan to make repayments.

3. The mainstream BNPL companies

Klarna, with its pink logo, is often what people think of when it comes to BNPL. It has spent time as Europe’s most valuable private tech company and was the most downloaded app in the Buy Now Pay Later market between January and July 2020.

Clearpay is another popular option on the market and has even become the primary sponsor for London Fashion Week in a two-year partnership that began in February 2021.

And there is Laybuy, which is accepted by UK high street retailers such as & Other Stories, and online retailers like Boohoo. There are many more providers of BNPL, each catering to different markets and demographics.

4. How BNPL works and what it costs

There are multiple options when it comes to settling your BNPL bill.

Some are interest-free, such as Klarna’s Pay In Three scheme that splits the total into three payments, one due immediately, one 30 days later and the final 60 days after the purchase.

For larger purchases, Klarna financing spreads the cost of the purchase for up to 36 months. The first payment is taken one month after purchase, and they continue monthly until the full payment is complete. This option charges interest and involves completing a soft check for credit score.

Clearpay allows customers to pay the total balance in four parts within a total of six weeks. The first instalment is paid immediately, and a late fee is charged if you miss one.

Laybuy allows you to spread the cost over six automatic weekly payments, interest-free.

They may apply a £6 late fee if a payment is missed twice.

5. Is BNPL a good idea?

That depends. It can be a fitting, convenient and cheap credit solution for customers wanting to make a one-off purchase that is not within their budget today but reasonable when spread over several payments. But the costs must be managed correctly for that to be the case.

If not managed correctly, it could be the start of a debt cycle due to late payment charges if you miss payments, as well as having a negative impact on your credit rating, which could make it harder for you to get approved for credit in the future. The main question to consider is whether you can afford the repayments.

6. How Buy Now Pay Later affects credit scores

Since 1^st June 2022, Klarna has been sharing Buy Now Pay Later UK data with credit reference agencies Experian and TransUnion. This means that Buy Now Pay Later purchases made through Klarna will be visible on your credit file as a soft credit check, which Klarna says will not affect your credit score. However, Klarna have stated that if you apply for one of their Financing options, a hard credit check will be performed, which may affect your credit score. Klarna and TransUnion have reassured consumers that BNPL purchases showing on your credit file will not impact your credit score right now – but it may have an impact in the future. Other BNPL companies have yet to announce whether they will follow suit.

Your credit file is not the same as your credit score, the latter being a number that credit reference agencies assign to you that indicates how reliable you are at borrowing and repaying money to lenders.

A good credit score is achieved through being a responsible borrower, and there are positive steps you can take to improve your credit score. It is a good idea to check your online credit report on a monthly basis to keep an eye on your financial information. 

7. How BNPL is evolving – fast

In recent months there have been many industry developments. Several tech giants and high street bank NatWest have announced intentions to enter the market. Last month Apple confirmed it was to launch its own BNPL scheme in the USA, triggering concerns about the use of customer data from America’s top US consumer finance regulator.

The FCA (the UK’s financial regulator) is keen to get BNPL companies further regulated by 2023 to give customers more transparency and make sure that customers are treated fairly. 

8. Does Buy Now Pay Later guarantee approval?

No, that is not always the case. Consumers can be refused, and it is worth checking out the terms and conditions of the provider before considering a purchase. It is also good personal finance practice to monitor your credit files regularly, so that you can quickly spot any potential issues that could lead to a rejected BNPL application.

9. The alternatives to Buy Now Pay Later

There are alternatives to using Buy Now, Pay Later.

The most obvious is the tried and tested buy it when you can afford it route. Waiting a few more days until after payday to make that purchase of a new pair of shoes on your debit card, rather than opting for instant gratification, means you avoid unnecessary borrowing, and don’t risk impacting your credit rating.

Regarding non-essentials, another way of funding larger purchases is to save up. Online bank accounts make this easy by offering functions such as rounding up spends to the nearest £1, and funneling those small amounts into an attached savings account. You can even assign goals to your savings, to help focus your efforts and achieve that big purchase quicker.

Using a credit card responsibly by repaying purchases within the grace period or taking advantage of an interest-free offer remains a longer-term alternative. However, it is important to be disciplined with spending on credit, and not allow yourself to run up debt that will be difficult and costly to repay.

If you can, it’s best to steer clear of high-interest options such as payday loans, especially for non-essential purchases.

Another major money concern consumers and businesses face currently is the high cost of electricity and gas, but there are other ways to save money on energy bills.

10. The future of Buy Now Pay Later

BNPL has shaken up the consumer finance market. The latest development in the industry seems to target businesses instead of shoppers.

Bloomberg has reported that startups in Buy Now Pay Later are looking to provide companies with short-term loans that help them go about their trade faster than traditional finance from banks. Watch this space.

Naga offers a secure platform that allows you to manage your investments with the peace of mind that comes from professional experience.

The financial market revolution is now a reality at NAGA Group. This platform is home to a social network that provides a number of advantages. You will have access to social trading, where you can learn from the knowledge and experience of other users. You canalso see new developments in real time and take advantage of informative videos and the latest news, all with the certainty that your personal information is completely private.

Trust and regulation

Choosing the best platform from among the many that are offered is the first step in delving into online trading. NAGA allows you to practice trading with a no-risk demo, which can help youlearn, acquire more knowledge and increase your chances of success. With this simulator, you can practice trading different financial instruments such as stocks, bonds, currencies, etc.

Professionalism, safety and transparency are essential when using an online broker that trades your money in the stocks that you request. It’s also important to verify that a broker is regulated and supervised by a governing body, meaning that they are obligated to comply with a set of norms that guarantee solvency and the protection of funds.

NAGAis a regulated broker with the licenses necessary to be an intermediary in the financial markets. It is authorized and regulated by the CyprusSecurities and Exchange Commission, CySEC and is registered under code HE251168. It is subject to the Markets in Financial Instruments Directive (MiFID), a European directive that decides the way that investment consulting firms inform their clients about their financial products. Their website also falls under German intellectual property laws.

An environment with many options

Besides its social trading platform, NAGA offers a range of productsrelated to the cryptocurrency investment market including updated charts for different stock prices, such as ETHUSD, DOGEUSD and XTZUSD,among others. These products include:

• NAGA App available for iOS and Android.
• NAGAWallet, a virtual wallet for safeguarding and exchanging cryptocurrencies with other users.
• NAGAPay, an exclusive platform that combines an IBAN account and a VISA card, allowing you to trade and invest from your mobile device.
• NAGAProtector is a tool that lets you add a greater level of protection to your trading account.
• NAGACoin is the platform’s virtual currency.
• NAGAAutocopy for automatically copying the trading done by the most experienced investors. This is a good option if you are not a professional trader.
• NAGA Exchange is a platform for secure cryptocurrency exchange.
• NAGA Achievements is a tool that gives you discounts according to your level of experience on the platform.

Technical considerations

In order to utilize these products, you must register and create an account with NAGA. The process is simple: First, go to the NAGA website and click on “register.” Here you will enter your personal information like your name, phone number and email. Then, you will create a password. NAGAMarkets will send you an SMS code and an email to confirm your information and open your account. From there, you will be asked to fill out a questionnaire about your investment knowledge and experience and to accept the NAGA terms and conditions.

NAGA provides excellent customer service and quick response times through their help center. You can contact them through their website, by phone or by email. With the live chatoption, you’ll receive immediate technical support to help you resolve any issues.