(Newswire.net — April 24, 2019) — More than three-quarters of people get declined for a loan, according to recent studies. Does your loan application keep getting declined?
You shouldn’t give up on getting the loan you desperately need to support yourself or your business. Instead, you need to start wondering what you need to do to get a loan.
Check out the top reasons why people get declined for a loan. You’ll also learn how these reasons can be avoided. Let’s go!
1. Wrong Info on Your Credit Report
Up to 90 percent of lending decisions are determined by the score on your credit report.
Therefore, without a doubt, incorrect information on your report could significantly damage the chance of your application being accepted.
Furthermore, errors on credit reports are surprisingly common. In fact, roughly one in five people, according to the Federal Trade Commission, experience errors.
This could be anything from minor mistakes regarding personal information to duplicated debts listed.
If you suspect that you’ve been declined a loan on the basis of your credit report, it’s essential that you check the validity of the information displayed.
2. You Didn’t Meet the Requirements
The lender is also obligated to check whether you can afford to serve the loan yourself.
If the lender has concluded based on your financial records that you don’t meet the requirements of the lender, then you could have your application for a loan declined.
There are a number of different considerations a lender should take into account when looking at your application. These include the following:
- The amount of the loan
- Household income
- Regular expenses (e.g. rent)
If you want to be accepted for your loan application, then you may need to convince the lender that you meet the requirements.
3. You’re Already in Debt
The average American has up to $38,000 in personal debt.
Even if your loan application is to be used to service the debt and consolidate your existing debts. The lender could make the decision to reject your application regardless.
Therefore, if you have existing debt, you may need to pay off the debt before you apply for another loan. The quicker you do this, the faster you’ll be accepted.
4. Lack of Unstable Employment
If you work in the gig economy or receive an irregular income, you may be rejected for a loan.
The lender would usually expect you to repay the loan in installment each month. And yet, if you don’t receive a regular salary, this could be challenging.
Without a stable income, you’re probably going to be rejected from a loan. You may need to switch to jobs. Or, you could provide evidence that you’ll be able to repay the loan through assets if necessary.
5. Poor Credit Score
Around one-third of Americans have either a poor or bad credit score. This can significantly damage your chances of being accepted for a loan application.
You can take multiple measures to improve your credit score quickly. This can range from paying off your credit cards to eliminating existing debts.
Have You Been Declined for a Loan?
Now you know the reasons why you got declined for a loan. Make sure you put everything right before you re-apply for the loan.
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