What to Do if Your Loan Application Is Rejected

What to Do if Your Loan Application Is Rejected

 

banking.about.com – If your loan application is denied, you might wonder what to do next. Why were you denied, how long do you need to wait before applying again, and what steps can you take to prevent it from happening again? It’s important to understand exactly what happened because it will probably continue to happen if you don’t take action (plus it’s a warning sign that something might be wrong).

This applies to pretty much any type of loan that you apply for, including home and auto loans, credit cards, personal loans, and business loans.

Whenever there is a disconnect between what you thought was possible and what your lender agrees to, it’s worth narrowing that gap.

Understand the Problem

The first step is to find out why your loan application was not approved. Lenders are generally glad to give you a reason, and they’re required to provide certain disclosures in some cases – so there’s no reason not to find out.

The most common reasons for being denied credit are:

1. Problems with your credit

2. Not enough income

Bad (or no) credit: lenders look at your borrowing history, usually in the form of your credit scores, when you apply for a loan. They want to see that you have a solid history of borrowing and repaying loans. However, you might not have borrowed much, or you might have experienced some challenges and actually defaulted on loans in the past. Either way, it’s harder to borrow without good credit.