Are you being denied loan applications? If so, you’re not alone. Many people struggle with this problem and are not aware that there are simple steps you can take to increase your chances of being accepted.
Read on to learn the most common reasons why you’re not getting approved for loans. Also, read up on some of the warning signs of a failed loan application. If you can’t get approved for a loan, your credit report may be the problem.
Signs that your loan application is being denied
If you are being turned down for a loan due to red flags in your credit report, you may not be the only one. In fact, up to 34% of all credit reports contain mistakes.
Your credit report plays a major role in whether your loan application will be approved. Therefore, it is essential to check your credit report carefully before applying for a loan.
You should request copies of your credit report from the major bureaus to make sure there are no errors or inaccuracies.
Checking your credit report before applying
Before applying for any type of loan, you should review your credit report to see if you qualify. You can do so for free from Experian by signing up for their credit monitoring service, which will send you alerts when any changes are made to your credit file.
Experian’s credit risk factors are an excellent place to start when attempting to improve your credit score. You should also practice credit good habits to avoid credit problems in the future.
The approval process for a loan or credit card is often rigorous, and any flaws on your credit report may cause problems. Lenders are looking for red flags and may overlook certain blemishes, but not all of them do this.
Understanding what a lender is looking for will help you breathe easier during the approval process. Once you know what the lender is looking for, you can start preparing for the application process months in advance.
Checking your debt-to-income ratio
Before applying for a loan, you should check your debt-to-income ratio. This number will help lenders determine whether or not you can afford the loan.
Debt to income ratios are important because they indicate how easily you can repay your debt. However, you should know that some expenses are excluded from the ratio.
American Express installment credit cards, for instance, are excluded from the ratio. Even though these accounts cost thousands of pounds each month, you’ll probably be able to pay them off each month.
Other monthly expenses that aren’t included are health insurance, car insurance, and even pool cleaning.
You can also lower your debt-to-income ratio by working extra jobs. Part-time jobs can make hundreds of pounds a month.
You can look for part-time gigs, such as babysitting, or drive for Uber. You can also advertise on local community forums and Facebook pages for fixed-price jobs.
If you are a stay-at-home spouse, consider taking on extra jobs that will help you earn money and lower your debt-to-income ratio.