If you have been declined loan, then you are not alone. At any given point in time, there are more loans rejected than approved. In other words, a majority of loan applicants are not the ideal candidates for banks or financial institutions.
What To Do When You Have Been Declined Loan?
There is a reason why credit unions, private lending firms, peer to peer lending networks and pay day loan providers have mushroomed all around the country. They cater to a large populace that don’t have a healthy credit score and credit score can be the most important factor to get a loan approved.
If you have been declined loan, then you should take the following steps.
First, find out the exact reason or reasons. It is quite possible that a combination of factors have lead to the rejection. At times, the reason for rejection can be as simple as bad credit or an unacceptable loan to value ratio.
At times, the reason can be as silly as incomplete application or incorrect representation of facts.
The second set of reasons can be resolved easily. Bad credit cannot be resolved overnight. Poor loan to value ratio can be addressed if you have some money to increase down payment or reduce the loan amount.
In some cases, the financial profile or the income, the nature of one’s profession and several such similar and dissimilar factors can be the reason behind rejection. Not always would you be told such reasons but if you can find out then it would be helpful.
In any case, you must apply for a loan when you know you qualify for it. Else, you must apply at a place or with a lender who would entertain a profile like yours. Consider reapplying with the same lender after a period of six months or a year, if you can wait that long.
During this time, you may want to address the reason for rejection. Else, you would have another rejection, no matter when you reapply. Bad credit can be repaired, loan to value ratio can be made more desirable for the lender if you increase the down payment which you can do by saving some money over a few months.
There are ways to remedy the situation. Having been declined loan is not the end of the world. You may and should consider alternatives. Look for lenders that do not consider the factors that were ground for rejection in your case as qualifying criteria.
Find Out Why You Have Been Declined Loan
Banks have the discretion to deny you a loan. Every financial institution and lender has the right to deny you a loan, but most are required to provide you a reason why you have been declined loan.
Many a time, people don’t realise that knowing why you have been declined loan will help you to get a loan the next time you apply for it. You have the right to know why your application was rejected.
We have lenders and companies that you can apply with on line and get a decision in a few minutes, even if you have been declined loan before.
The same individual or borrower can be denied a loan for different reasons by different banks or lenders. There is a certain degree of uniformity as to why a loan is denied but then there are discretionary factors as well. Let us talk about the common reasons that are likely why you have been declined loan.
The first and the most common reason is adverse credit. Depending on the loan and whom you have asked for the loan, your credit score will have the biggest influence. Some banks are more lenient while some lenders are very stringent.
Some private lenders may not even consider the credit score. It all depends on who you are dealing with and the type of loan you need. Obviously, you cannot get a home loan or a huge business loan if you have bad credit. But you should be able to get a small personal loan regardless of your credit score.
When you have your application declined or rejected, ask directly if it was your credit history. It is advisable to opt for a loan only after knowing if you qualify for it.
Banks and financial institutions make it clear that they will only entertain applications of individuals who have a certain credit score or more.
You need to know if you qualify and if you don’t then it is futile to waste time, energy and resources. You should rather focus on avenues that will get you the loan.
A common reason why you may have been declined loan is the lack of enough information. Normal clerical errors or typos, unintentional furnishing of wrong details or information can be remedied, although these can lead to rejection.
There are other aspects that are more important, such as proof of employment, proof of identification, financial statements and tax returns. All these factors play a role in approval or rejection of a loan.
You must delve into these details and speak with the lender to know if any of these is the actual reason why you have been declined a loan.
The purpose of the loan is also important. Whether you are buying a car or want to pay for higher education, the exact purpose and the viability of the spending is assessed by a bank or any lender. If the purpose does not sound good enough for the lender, then your application may be turned down.
Another very common reason why you have been declined loan is your ability to repay. This will be assessed on the basis of your income and existing financial liabilities or obligations.
Even if you have a good credit score, your application may be rejected if you are asking for too much money when your financial profile does not make enough room for repayments.
We have lenders on this page that will accept some bad credit history, so feel free to apply now for your new loan.