Was Your Loan Denied? Here Are Options of The Things You Can Do

In cases where you’ve applied for a loan recently, and your application did not go through, you may start feeling insulted. It would help if you did not consider this as something personal because there may be reasons why it got denied.

 

To improve your chances of getting the loan next time, you can start by understanding the reasons as to why you were denied and then look for the right changes that will help you increase your odds of being approved.

 

Build Your Credit

 

You may have been denied a loan because of your financial issues, which you may not be able to fix overnight. If this is your case, you can opt for some deeper changes for your financial profile over some time, which will give you an easier time to borrow. The moment you build credit, you will find an easier time borrowing in the future, especially when you have a strong credit history.

 

 

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That will mean you will have to borrow your loans and pay them on time. In that case, your credit will start improving gradually, and there is a likelihood you will get better interest rates and fewer rejections.

 

Find a Crowd

 

You need to be aware that you may not finance all projects yourself. For instance, some of your emergency expenses and the medical bills can find their way to some of the crowded platforms that may fund you, as most people tend to ask for support that helps them cover some of their kid’s bills.

 

Besides, you can opt for crowdfunding campaigns that may touch some medical bills and emergencies and register a record for this of the money raised on some large fundraising platforms. In this case, you can learn how the generosity of people can come in handy to save you.

Fix Your Credit Report

 

After you’ve been able to identify the reason why you were denied a loan, you can start reviewing your credit report. Because of the pandemic, you can request a free copy of your report as this can get done from all of the credit bureaus, for instance, the TransUnion, as you can only consider receiving a free report yearly.

 

Also, in case you have some negative remarks, for example, late delinquent accounts, there are possibilities that it can have harmed your loan eligibility. As you take your time to look over the crest report, you need to confirm that each account listing that belongs to you is appropriate and accurate.

 

In this case, you have the right to dispute some inaccurate information that may be shown on your credit report with the other credit bureaus. You can also consider doing it yourself despite paying for a credit repair company to help you dispute some negative items. There is no charge for disputing some incomplete and inaccurate information in this case. You can look at the Federal Trade Commission since it can help provide the distribution error sample letter for your credit.

 

 

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Consider Other Alternatives

 

Most banks tend to have various guidelines and criteria regarding lending. If one bank refuses to lend you, you can opt for a different bank. You can try your bank and branch before you start looking elsewhere, but if one bank cannot work out, you can consider a different one.

 

Consider Pay Downing Your Debt

 

It doesn’t matter if you have a strong credit score because the lender also looks to see the amount you owe for the credit card bills, student loans, and even the car payments and starts comparing them to the amount you make. It can be considered your debt-to-income ratio as it may play a big role since the lender can start determining if you have eligibility to be given a new loan.

 

For instance, in cases where your wages get spent on the existing high monthly bills, there is a possibility that the lenders may not be confident that you will make your monthly mortgage payment in a good way.

 

Avoid Loan Purpose Mismatch

 

Some personal loans can give you some flexibility regarding the use of funds. Some lenders, however, may not allow you to use them for things like secondary education or for making some investments like stocks. In that case, ensure that the loan applications can match your purpose. For instance, if you need some professional certification or training funds, you can start by looking at the federal student loan, which can be appropriate.

Look For a Person That Can Co Sign Your Loan

Not every option you may be having can be a smart option. If you are a young adult with a good job and not many credits history, you can ask some of your parents to cosign a loan, which cannot be a bad idea. There is a time when you decide to cosign a loan; it may not be considered a bad plan.

Keep Accounts Open

When you start paying your debt down, you can avoid the accounts. It can start hurting your score because you may need different open accounts, particularly those that opened long ago and to show your credit history. In this case, you can consider a mix of credit cards, student loans, and auto loans as they can show you’re able to handle credit.

 

While paying down debt can hurt your credit score, it can start closing your account completely by eliminating the available credit. Also, if you consider crossing an account despite spending the same amount on different credit cards, you will be using a bigger percentage of your remaining available credit. That’s where credit utilization comes in, and in case you start using too much of your credit, then the future creditors can start getting hesitant in extending the loans and the other credits.

 

In sum, if your loan application gets denied, you should not give up. Consider taking some of the above actions since they can help improve your finances before applying again. Some of them may not need much effort, like clearing up the negative items on your credit reports. The others include building a thin credit file which may require some patience. The above approaches can make you a better candidate as they can help you increase the odds of getting approved in the future.

 

Good luck!

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/