Once you’ve determined the likely reason for your rejection, you’ll want to work on improving your financial situation before applying again. Below are some steps you can take to increase your chances of being approved.
Improve Your Credit Score
One of the best ways to ensure your qualification for a personal loan is to improve your credit score. The first step you’ll want to take is to check your credit report to verify it has no errors. It’s possible to obtain your credit report through various online resources and websites, but your best option is AnnualCreditReport.com where you can get a free weekly credit report from each of the three major credit bureaus all in one place. If you find any glaring errors in your credit report, you’ll want to dispute them with the appropriate bureau.
Once you’ve checked your reports for errors, consider how you can build or improve your credit score. You may want to:
Request a credit limit increase: Asking your credit card company for a limit increase and then not using the card will lower your credit utilization (a big factor in your credit score).
Pay down your credit card debt: Paying off as much of your credit card debt as you can afford to pay will lower your credit utilization. Using a debt payoff method or talking with a financial advisor can help you prioritize and overcome credit card debt.
Set up automatic payments: Having your payments automatically deducted from your bank account each month will help you avoid missing or making late payments.
Taking steps to repair your credit score can also help lower your DTI, increasing your odds of loan approval.
Ask Someone To Co-Sign
If your financial situation isn’t sufficient for loan approval, another option may be to ask someone to co-sign a loan with you. Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application.
Your co-signer – ideally, a family member or close friend – will apply alongside you, and you’ll both be responsible for repayment of the loan. Because both your credit score and your co-signer’s score are on the line if you miss a payment, it’s important to make sure any potential co-signer understands the risks involved.
Please note that Rocket Loans℠ doesn’t currently offer the option to co-sign on loans.
Compare Lenders
Lending requirements aren’t the same across all lenders, so it’s often worth comparing multiple lenders to see if you may be loan eligible somewhere else.
Using a broker or lending comparison website might increase your chances of finding a lender that will approve you for a loan. With these services, your loan request goes to several lenders at the same time. This doesn’t damage your credit in any way, and it can provide you with more options.
If you’re still struggling to qualify through a traditional lender, consider working with your local credit union. Credit unions are often more flexible in their requirements and are willing to work with you to evaluate your financial situation.
Use Collateral To Secure The Loan
Most personal loans are unsecured, meaning they don’t require collateral and are approved primarily on your creditworthiness. If your credit score is lower than you need it to be, you could consider a secured loan.
The inclusion of collateral makes secured loans easier to get approved for, as it assures the lender they’ll get their money back one way or another – even if you default on the loan. After enough missed payments, your lender can take permanent possession of the collateral asset you’ve offered up.
Prequalify For A Personal Loan
Prequalifying through a lender can also be a beneficial strategy. Getting prequalified typically only requires a soft credit check and can provide you with a strong indicator of whether you’ll be approved. A prequalification also includes your tentative loan amount and interest rate. It’s important to note that although a positive response may come from your prequalification letter, this doesn’t guarantee you’ll be approved for a loan.
You may be able to increase your chances of being approved for a loan by asking for a little assistance from others. For example, applying for a loan with a cosigner who has a good-to-excellent credit score can help you secure loan approval and a better interest rate.
You can then apply for a loan again — sometimes even sooner than the lender's stated waiting period — and potentially get approved. Some strategies for enhancing your loan eligibility include paying down existing debt, boosting your income or even applying again with a creditworthy co-borrower.
Paying down debts, increasing your income, applying with a co-signer or co-borrower and looking for lenders that specialize in loans within your credit band could increase your approval odds.
There are many reasons your application might have been turned down. These include: a history of missed payments or possible fraudulent activity on your file. the lender deciding you wouldn't be able to repay.
Hardship personal loans are a type of personal loan that is designed to help you overcome financial difficulties. This type of loan is generally offered by small banks and credit unions, and has lower interest rates, lower maximum loan amounts, and shorter repayment periods than standard personal loans.
Your options for poor credit loans include: Personal loans: Some personal loans are available with bad credit, but you will likely pay higher interest rates and may not be able to borrow the full amount. Secured loans: With a secured loan, you put up an asset as a guarantee when you apply for a loan with bad credit.
The banks revealed that they are being more strict with their loan standards for multiple reasons, including: an uncertain economic outlook, a decreased risk tolerance, funding cost concerns, and effects of legislative changes.
If a creditor or lender discriminates against you in violation of the ECOA or FHA, you can complain about the issue to the creditor or a government agency, or you may sue the creditor.
For a $30,000 loan, you'll typically need a credit score above 600 just to qualify or above 700 to get a competitive rate. A high enough income: Part of the lender's evaluation of your loan application includes determining whether you can afford the payments.
A major reason lenders reject borrowers is the debt-to-income ratio (DTI) of the borrowers. Simply, a debt-to-income ratio compares one's debt obligations to his/her gross income on a monthly basis. So if you earn $5,000 per month and your debt's monthly payment is $2,000, your DTI is 40%.
If your financial situation isn't sufficient for loan approval, another option may be to ask someone to co-sign a loan with you. Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application.
Banks and other lenders often use credit scores as an indicator of how likely it is that you will repay any money they lend. If your credit score is low, then many lenders may refuse to give you a loan. It can be especially frustrating if multiple banks or traditional lenders turn you down.
Lenders have the ultimate decision-making power when it comes to who they will provide loans to. In general, though, if you're denied a personal loan, it most likely has to do with your credit score, income situation, or DTI. Before you apply, check the lender's criteria to determine if you're likely to qualify.
If you know you have a bad credit rating or a number of unsecured debts, consider finding a specialty lender. Revive Financial can find loans for people who would otherwise be declined. We aim to improve your financial situation before we offer you a loan so you are in a better position to make your repayments.
Use your 401k. Provided your 401k plan allows loans, borrowing against it can be a quick way to access cash without going through a credit check. As long as you have a vested account balance, a poor credit score won't matter. However, you'll have to pay the money back with interest.
You might not get approved for the best online payday loans due to several reasons. The common ones include insufficient income, lack of a bank account, not meeting age or residency requirements, or having an outstanding payday loan with another lender.
Introduction: My name is Dr. Pierre Goyette, I am a enchanting, powerful, jolly, rich, graceful, colorful, zany person who loves writing and wants to share my knowledge and understanding with you.
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