Rejected for a Personal Loan? Let’s find out why…
Having a rejected personal loan application can be disheartening. It’s easy to become discouraged, especially if it delays plans to consolidate debt or renovate your home. However, don’t dwell… take action!
Within this guide and following these steps, you’ll not only know why your application was rejected, but also gain sensible tips to increase your odds of approval next time. So, stay tuned.
Discover Why Your Loan was Denied
If your loan application has been rejected, you might be unsure where to turn next. Firstly, find out why you were rejected. Along with that, finding out how long you need to wait before reapplying would be helpful. As well as steps to prevent it from happening again.
You can try asking the lender for the exact reason why. Here are some common reasons:
- Low credit score
- Too much debt
- Not enough income
- Insufficient or incorrect documentation
After understanding why your application was rejected, you can then try and fix the problem. You may need to work on your credit, or pay off some other debt. Alternatively, double check to make sure all of the documentation you submitted was accurate.
Improve Your Credit Score
Improving your credit score may not be the easiest of tasks, but it’s better to get a head start before it’s too late. A key thing that you can do is to make sure you pay your bills on time monthly. Especially loans like car loans, mortgages, and even student loans. However, do not neglect other things like, utility bills, credit card balances and even your cell phone.
Be sure to work on paying down your debt. It could pay a big part in your loan application getting approved in the future. For more information on how to increase your credit score, click here.
Try a Different Lender
If you think that trying to improve your credit score is too far fetched, you could also look for a loan from a different lender. Depending on the lenders, they can have a variety of different approval requirements. So, getting denied by one doesn’t mean you won’t qualify through another. You could try a few to see what kind of results you get.
Re-Applying for a Personal Loan
Here are some easy steps to follow before you apply for your next loan.
Short-Term Strategies
Try out some of these initial steps before you decide to reapply, as they could be beneficial:
- Fix errors: If you have errors in your credit report, fix them.
- Pay off other debts: Reducing debts makes you look better as a borrower.
Long-Term Strategies
Unless your rejected personal loan was a fluke, you’ll benefit from making some changes so that it’s easier to borrow. Here are some helpful steps:
- Build your credit: Make sure to borrow and repay loans on time.
- Pay down debt: Paying off old debt will increase the amount of your monthly income that’s available for newer loans.
- Increase income: Could consider getting a part-time job or increasing your working hours.