I need a loan but keep getting declined. What should I do?

need a loan but keep getting declined

Getting a rejection is disappointing when it is the only hope to get minimal cash. It is the time to know the reasons for the loan rejection than despairing endlessly. It would help you figure- out the best ways to improve your application for loan approval. If you want to know the reasons and wish to gain approval on the first attempt, read ahead.

Top reasons for loan application rejection

From taking control of your finances to improving your credit score, ensuring a healthy financial journey is important. Here are some reasons why a lender may reject your loan applications:

  • Your credit history is very poor
  • You have a low income
  • You do not have your name on the electoral roll
  • Your address or residential location keeps changing
  • your profile reveals some fraudulent activity
  • Your expenses are higher than your monthly income (Debt-to-income ratio)

What should you do immediately after loan rejection?

There could be any reasons for the above-mentioned ones for loan rejection. The first thing to do here is to ask the reason for the loan rejection from the lender. Identify and seek ways to improve it. For example, if the lender rejected the application due to insufficient income, check whether you can borrow a lower amount instead. It is one of the ways to qualify.

Here are other things to do if you need a loan after being refused everywhere in the UK by a reliable direct lender immediately.

  1. Avoid applying anywhere as of now

If you were refused a credit, think carefully before applying.

It would be ideal to wait a few months before making your next application. Until then, seek other ways like- cash help from friends for urgent needs.

It is important because any new application you make after loan rejection gets viewed on your profile. The lender may deem you as desperate for cash. It may lead to another rejection. And worse, it may damage your overall credit score.

2)     Analyse your credit report for errors

It is the best time to review your past borrowings and spending. It will help you know the errors or paid debts that still reflect on your credit profile. For example- if you had paid all your credit card bills, but it still reveals on your credit report, get it removed.

Unless you default on credit card bills, the credit agency removes it from the credit report. Checking and eliminating issues like that can boost your credit score. It makes your profile trustworthy for a loan.

3)     Remove accounts with a person with low credit history

If you have been linked with an account with low credit and pending debts, seek separation. For example, if you have a gas and electricity bill in your name while living with a friend on rent, remove your association if you no longer live there.

Likewise, if you had a joint account with your divorced partner, get the old joint account information removed from the credit report. It is ideal if you both are not using it. You can ask the agency for a notice of disassociation. Close any finances jointly linked with them. It may work positively for your credit history.

4)     Get your name on the electoral roll

If you have just turned 18 or 21 and want to build your credit history, get your name on the electoral roll of the UK government. It is authentic proof of you being a regular citizen of the country.

You can also update the details if you have just shifted your residential place or changed your contact number. Not having updating profile lead to bad credit and impact your loan approval chances.

Thus, keep an eye on the recent changes. Lenders consider the electoral roll an important parameter when you take a loan for the first time with no or limited credit history.

5)     Check the loan criteria before the application

It is the first thing that you should do while applying for a loan. Every lender has unique lending criteria. It is important to know whether you can qualify or not. Applying without knowing one may lead to ultimate loan rejection.  Identify:

  • The age limit one can apply with
  • The nationality issues
  • The income parameter to qualify
  • Guarantor requirement (if required)
  • APR or total loan costs
  • Missed payment costs
  • Whether you need a debit card with a direct debit facility

Knowing this information may help you decide right. You can also compare the best lenders based on these details. As a direct lender, we clear the terms and help you know the exact costs without impacting your credit history. We ensure this by providing an eligibility checker.

  • Use an eligibility checker to know the approval possibilities

An eligibility checker is a scale that lenders provide for you to have an idea of the approx., or tentative loan amount that you may be expected to pay after approval. It is a free checker that does not impact your credit score.

You can check as per your needs, income, and other details. Knowing the loan costs would help you budget for the same and apply for the right amount. Borrowing an amount, you can comfortably afford is the trick to successful loan approval.  You can budget that amount to pay every month as repayments to the lender.

7)     Seek ways to increase your income

If you have a low income and low credit score qualifying for a loan may not be possible. Although you may qualify with a guarantor, co-signer, or collateral, sometimes you need only a small amount.  Alongside improving your credit history, check whether you can improve your income. There are different ways you can do that. Here are some:

  • Check for additional freelancing opportunities
  • Take up 2-3 part-time jobs if unemployed
  • Check promotional chances in the existing job
  • Take up more projects as a self-employed
  • Tap passive earning aspects with investments

Bottom line

These are ways to improve your loan approval chances after a loan refusal. It is ideal to wait for some time before making your next application. Work on your credit history and pay some debts. Ensure updated information on the electoral roll to qualify for better rates.

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