In times of financial need, personal loans are a great option. If you have been declined for a personal loan, you may ask yourself, I need a loan but keep getting declined. What should I do?
When you need a loan but keep getting declined, it can be frustrating. However, don’t give up hope just yet. There are still some steps you can take to improve your chances of being approved for a personal loan.
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Why Do I Keep Getting Rejected For Loans?
You may be wondering why your loan application was declined. There are a few common reasons this occurs.
To find out why you were rejected, consider calling the lender to ask them directly. If they cannot provide you with a specific reason for rejection, you’ll need to do a little more research into your current financial situation.
Let’s look at a few of the most common reasons a personal loan application may decline.
Low Credit Score
A low credit score can make it challenging to get approved for a personal loan. Most lenders will want to see a credit score that falls within the range of 600 – 700. If your credit score falls below this threshold, you may need additional documentation or collateral to get approved.
Not Meeting Loan Requirements
Qualifying for a personal loan usually requires that you meet specific basic requirements. Although these requirements may differ from lender to lender, they typically include the following:
- 18 years of age or older
- Must be a U.S. resident
- Must be employed (including self-employment)
- Must have a valid checking account
High Debt-To-Income Ratio
Your Debt-To-Income (DTI) Ratio is the amount of debt you have compared to your income.
Lenders use this number to decide if you’re a good candidate for a loan. A high DTI could mean that you’re overextended and may have trouble making your loan payments. If your DTI is too high, you may not be approved for a loan.
Keep your DTI low to increase your chances of loan approval.
How To Get A Loan When You Keep Getting Denied
Once you’ve determined why your loan application was denied, you can work on improving your financial situation. Working on your current financial situation will increase your chances of being approved.
Here are a few steps to increase your chances of being approved for a personal loan:
Improve Your Credit Score
Your credit score is one of the most important factors lenders will consider when applying for a personal loan. A high credit score indicates to lenders that you’re a low-risk borrower, which means you’re more likely to qualify for a loan and get a lower interest rate. If your credit score is lower, you can do a few things to improve it.
1. Get a copy of your credit report
The first step to improving your credit score is to get a copy of your credit report from all three major credit bureaus (Experian, TransUnion, and Equifax). This will give you an idea of where you currently stand and what areas you need to improve.
2. Check for errors
Once you have your credit report, check it for any errors. If you find incorrect information, dispute it with the appropriate credit bureau.
3. Pay your bills on time
One of the most significant factors in your credit score is your payment history. Therefore, it is important to make sure that you are always paying your bills on time. If you have any late payments, catch up as soon as possible.
4. Keep your balances low
Another factor that is considered in your credit score is your debt-to-credit ratio. This is the amount of debt you have compared to the amount of credit available. It is essential to keep this ratio low, so be sure to pay down your debts as much as possible.
5. Use a credit monitoring service
If you are serious about improving your credit score, you may consider signing up for a credit monitoring service. These services will help you keep track of your progress and give you tips on how to improve your score further.
Ask Someone to Co-Sign Your Loan Application
If you’re having difficulty qualifying for a personal loan on your own, ask a friend or family member with good credit to act as your cosigner. A cosigner is an individual who agrees to repay the loan if you default on the payments. Having a cosigner with solid credit can increase your chances of loan approval and may help you secure a lower interest rate.
Remember that as the borrower, you’re responsible for repaying the entire loan amount, even if your cosigner has signed on to help. Be sure to choose someone you trust and be aware of this responsibility before moving forward.
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Bottom Line
Not being approved for a loan can be discouraging, especially if you need the money. Keep in mind that there are other options available to explore. By understanding why lenders might reject your loan application, you can work on fixing the problem so that you’ll have a better chance of getting approved next time.
If you need help exploring your different lending options, My USA Finance can assist you. We work with various lenders to offer our customers the best possible loans.
Get started on your online personal loan application today.
