7 Common Reasons Personal Loans Are Rejected
What are the reasons personal loans are rejected?
What are the reasons personal loans are rejected, you might wonder? There can be many. Read on for more.
1. You Have an Error on Your Credit Report
Let’s be honest: Even short term loan lenders online can catch this one right off the bat, and many times, people simply don’t realize that most lenders really are that smart. In fact, many of their agents are trained to detect whenever there’s an error on your credit report. It’s just fact.
A good thing to note, on the other hand, is that most genuine errors can be corrected. All you would need to do is write an inquiry letter to the credit bureau in charge. Then report the matter. You can also contact the creditor directly. More often than not, this is better because the creditor can update all three of the major credit bureau’s at the same time. If either the bureau or a creditor agrees to fix the error, which many times does happen, then they will have the error removed, making for one less negative thing on your report. It’s worth a try, right? There is nothing you can lose by giving it a go….
2. You Carry Too Much Debt
When you shop personal loans rates and find out you’ve still got way too much debt under your belt, it may result in wasted time, both for you and for the people you’re inquiring from. You’ve got to fix that income – to – debt ratio first as that’ll always be the next thing that needs to get taken care of if you really want to move forward. Take our advice for it.
You’ve got to not only pay off your current debts, or keep them above water from the money sharks, but you’ve got to retrain your thinking entirely….so that you don’t make those very same mistakes again. And that takes discipline, determination, planning, continual strategy, assessment and even re-assessment of your goals. It won’t be easy, but it can be done, and you need to do it.
3. Your Employment is Unstable Because You Change Jobs Frequently
This is a tough one, especially for those managing money under 30 years of age, which many now call the “job hopper generation”. Millennials, indeed, do have a knack for leaving their current situation — be it work, school, home or something else — to go and venture out in the name of “change”. But too much instability, of course, can be a bad thing. There must be balance. And Baby Boomers have likewise reported that keeping this generation in a state of stability, and not having it constantly run after every little thing that “shines”, is perhaps their greatest challenge of this decade.
But not all who ‘hop jobs’ frequently are in the young crowd. In fact, anyone can do it, and people of all ages and genders and cultures are guilty of this ever – growing trend. In fact, it’s common knowledge, now, that most people will leave their employer after about 1 – 2 years, and others will stick around no more than about 5, in total. And these are the more committed employees. There’s just no sense of job or company fidelity, as there once was 30 years ago.
Layoffs happen, companies change, salaries drop, and good workers are gone. Sometimes, it’s even personal issues that arise and pull good employees from their place of work. This happens more and more in our society…..
4. You Have Insufficient Income Overall
So what are the reasons personal loans are rejected? We ask once again because the question must be stressed. And did you know that this one was an answer, too? You might have.
Yes, that’s right — lack of sufficient income will definitely knock down that income – to – debt ratio we mentioned, and in a negative way, leaving you fending for other options. So if you want a loan, you’re going to need to make enough money to pay it back. Simple as that, friends….
Perhaps you can help with this by getting two jobs, if you’re up for it. Make the time; it may be well worth your efforts and can even give you a greater sense of purpose, responsibility, achievement, value in the work place, and even self – control. Take your mind off your excessive spending habits, for instance, and use the time you could’ve been swiping all those cards…..at your second job, where you can be learning new skills, making money (instead of losing it), and teaching yourself how to be more disciplined. Have you ever thought of it that way?
5. You Retain Too Low of a Credit Score
So what are the reasons personal loans are rejected? WHAT??? Credit score? Really?
Yes, really, and it does happen to more people than you know. Having a score under 600, for instance, isn’t terrible, but you may have shop cash loans bad credit for emergency money. Even one under say 700 is pushing it for prime loans, and this all just goes to say that a credit score that is “average”, though better than “poor” or “terrible”, would thus become your next step to strive for….if you are in this situation. Get it up just a little higher, with time and patience, and then just a little more, then a little more, and you get the idea…..
One of the all – time best ways to improve your credit score is to pay off all credit lines/credit cards; the very least you can do is pay every monthly minimum payment, if nothing else, for doing this alone will gradually improve that score for you. And the sooner, the better if you need a personal loan with bad credit. You can also cut down your revolving lines of credit or credit cards, only keeping 1 – 3, max. Don’t overdo it. And make sure that, out of these few you now hold, that 30 % or less of them is being used….or basically, is the remaining amount you owe on them.
6. You’ve Got Too Many Loans Out Currently
If you’ve got a car loan, a student loan, a business loan, a personal loan, a mortgage loan and perhaps some other loan going on all at the same time, this could be a huge red flag. In fact, without a doubt, it is….as it tells the lenders that the main source of funding for all these different needs in your life is coming solely from borrowed money and not your income or savings. See how bad this looks in the eye of the person who is considering whether or not to approve you? See it from their point of view, and you will understand perfectly.
7. There’s Too many Personal Loan Applications With Rejections
So what are the reasons personal loans are rejected? This is the last time I’ll state the question. So don’t worry. I know you’ve probably gotten tired of reading it on here, by now.
This last and final reason has to do with too many revolving applications, which may or may not take a hit on your credit. Creditors will manage to get on your credit file, either now or in the near future. Everything is updated regularly.
But don’t dismay — if you’ve got way too many of the reasons applications are rejected on your credit history, just give it some time for them to clear off the record. One to two years is usually enough, and then you can try getting a loan again, but not overdoing it. Don’t apply to way too many places again. Learn from the mistake and be patient.
Self – control is a major contributing factor that creditors and bureaus look for when determining to approve you on any loan, and the fact that you have applied way too many times, getting rejected, and continued to apply nonetheless only shows that you are impatient, rushed, perhaps impulsive, and lack the will to wait a little longer…until your finances, payment history, income, credit or something else improves. And you have to be the one to discipline yourself and take that next step, saving money for the debts you owe, first.
Conclusion : So, then, what do I do if my loan application is denied?
So what are the reasons personal loans are rejected? You’ve now seen the major seven. But of course, there are some others, too. The denial could result from a whole wealth of different sources.
Nonetheless, our goal here was to show you some angles you may not have assessed before. And we hope we have. At least, you’ve been pointed in the right direction and given more insight into the matter, with some additional resource links listed here, where you can read further…..
And hopefully, the answer to the question, “So what are the reasons personal loans are rejected?” has now been ingrained in your mind. Remember this information the next time you choose to apply for a loan as it could save you time and effort in the process. And best of luck in your journey to healthy financial future!
Efrain S is a contributor and writing professionally creating palatable, actionable content in the realm of finance. Efrain obtained his BA in Communication with a minor in Mass Media studies. He also writes academic content in APA, MLA, CHICAGO, HARVARD & TURABIAN styles. Plus, he’s 100% fluent in English and Spanish.
Ethan founded OfferEDGE in Dec 2013 with the mission to unify the financial quadrants through a system that allows businesses to be seen when consumers use a Single Sign On across Lending, Credit, Money and Real Estate. Taub invents the offers and IP, while overseeing all aspects of the company. He also has orchestrated the company’s earned media across the brands Loanry®, Cashry®, Debtry®, Budgetry®, Billry®, Taxry® and more. This includes over 500 publications that have been featured across the web.