How Long Does Refused Credit Stay on File?

Updated: December 20, 2023 Author:

Quick answer: When you apply for credit, a hard search is run. Records of searches for credit applications stay on file for 1 year with Experian and Equifax and 2 years on your Transunion credit report. The time limits apply regardless of whether you are approved or denied credit. It’s the hard credit search that stays on your file for a fixed period.

    Why being refused credit makes it harder to obtain credit

    When you are refused credit, the refusal is not recorded on your credit file. The hard credit search is. It is the credit search that reduces your credit score.  The more lenders search your credit files, the more desperate your situation can appear. After submitting a credit application, regardless if you’re approved or denied, it’s wise to hold off on applying for any more credit for at least a few months. Preferably 6 months. Spacing credit applications out is good practice to allow time for your credit score to recover between applications. 

    How lenders decide to approve or deny credit applications 

    Lending criteria differ by company based on the level of risk they’re willing to take. Your credit score is meaningless to lenders. They calculate a unique score using their in-house formulations. It’s your financial history that is being assessed. At the most basic of credit searches, lenders want to see that you have no court orders issued for failing to repay debts. For credit card applications, defaults or late payments can result in your application being refused. For high-value secured loans, your debt-to-income ratio may be too high to pass the lenders’ affordability criteria. 

    Does your credit score go down if you get rejected for credit?

    Credit scores go down as a result of the hard search done by lenders. A single application won’t put much of a dent in your credit score, but being repeatedly rejected in a short period will! 

    Every entry on your credit report will either increase or decrease your credit score. As an example, being on the Electoral Roll can see your Experian credit score increase by up to 50 points. How bad is a default on your credit file? A 350-point drop! That’s a severe handicap to your ability to access credit. A CCJ can cost you 250 points. Keep in mind that although the point decrease is lower for a CCJ than a default, there will already be a default registered on your file before court orders are applied. The cumulative impact on your credit score will be more severe. 

    Those points are only illustrative of how Experian calculates credit scores. Lenders use a similar points-based system to determine your credit score.

    When to Apply After Having a Credit Application Rejected

    To avoid a cycle of repeated rejections, after any hard check is done, wait between three to six months before submitting another application. During that time, look into the possible reasons for being refused credit. Your credit reports are a starting point detailing a guideline credit score, as well as the financial history and your historical account management that lenders see when they assess your credit report. What to look for are any negative entries. How long it takes for entries to drop from your credit report depends on the type of information it is. That said, more weight is applied to the most recent entries so missed payments and account defaults close to being dropped from your credit report, won’t have as high an impact as an entry added in the past year.