What To Do If Your Personal Loan Application is Denied

What To Do If Your Personal Loan Application is Denied

Many people think that once one company denies their personal loan application, they have no other options. Not all lenders use the same criteria and there are ways to get more information on how to improve your chances of getting a personal loan. Before you turn to a drastic solution like a payday loan or title loan, you should find out more about what you can do to get your personal loan approved.
 
Get Your Credit Report

By law, financial institutions are obligated to provide you with information about why your loan was denied. They also have to tell you which credit report factored into their decision. By writing to the credit-reporting agency they used and sending them a copy of your loan rejection letter, you can obtain a free copy of your credit report. Some companies will pull reports from more than one of the three major credit bureaus, so you may need to repeat this process one or two additional times. Check your report(s) for any wrong information or items that should be removed. Mistakes on your credit reports have a big impact on the loan approval process.

Speak With Loan Officers

Most banks do want to lend you money as long as you meet their criteria. Call the bank and ask to speak to a loan officer. The loan officer’s job is to explain to you exactly why your loan was denied and what you can do improve your chances if you want to re-apply in the future.

Even if you want to apply elsewhere, speaking with the loan officer is still a good idea because you will learn which obstacles you need to overcome to get a personal loan.
 
Different companies place different emphasis on income, credit score, and your debt to credit ratio. If you know which of these factors caused your loan application to be denied, you can call a loan officer at another bank you are considering applying with and ask about their approval policies. If they tell you that you are likely to be rejected for the same reason, you can save yourself time applying for a loan you will not receive.

Shop Around

Investigate different companies and look for those that offer a pre-approval process. Pre-approval means that the bank has already checked your credit and is willing to lend you money. You will still have to apply for the loan, but there is little chance your application will be denied unless something drastically changes on your credit report. It is important not to fill out too many loan pre-approvals because each inquiry affects your credit negatively. Many financial institutions consider too many inquiries as sign of someone who is desperate for credit and a high-risk candidate. You should fill out no more than 2 – 3 pre-approval applications at one time.

Borrowing money with a personal loan can be a difficult and time-consuming process, but many companies offer various loan products. Just because you were turned down for one type of loan, does not mean you might not qualify for another. Research before you apply again and you will increase your chances of getting a letter that says APPROVED instead of DENIED.