Finding out that you have been denied a loan can be a terrible experience, especially if you don’t know why or how to fix your financial situation. Here are some of the major reasons why you may find yourself rejected from a loan and what you can do to fix it.
FIND OUT WHY
Start off by finding out why your request for a loan was rejected. Reach out to the lender and ask if they are able to provide the reason why you were denied. Once you are able to pinpoint the exact reason why you weren’t able to receive your loan, it will be easier to fix.
NOT ENOUGH INCOME
Lenders will look at the minimum monthly payments for the loan and compare it to your monthly income. If they feel you are at risk at not being able to make your payments, your loan may not be approved. Obviously, fixing this problem isn’t as simple as ‘make more money’ or else everyone would do it. However, you can look at ways around this. For example, if you applied for a car loan and were denied, try saving up for a down payment as that will help lower your monthly payment.
TOO MUCH DEBT
Often times, your loan will be rejected because you carry too much debt through credit cards or other loans. Before applying for another loan, come up with a plan to start paying down some of your existing debt.
LOW CREDIT SCORE
If you have a low credit score, you are more likely to be denied from receiving any loans. Before applying, make sure your credit score is in good shape. When you apply for a loan, a hard inquiry takes place on your credit which make knock your score down even lower.
LOOK AROUND
Sometimes, it’s just a specific lender that won’t approve your loan. If you feel confident in your credit score, have the ability to make monthly payments, your existing debt is in control, and your loan is for a valid reason, try looking at different lender. Many credit unions will have their lenders work with you to make sure that you’re getting the best option for your solution.
