Why Has My Loan Application Been Declined?

When you’re in desperate need of some sort of loan, the last thing you want is for your application to be declined. But, unfortunately, this happens, and it happens a lot, in some cases, more people are rejected than accepted. In this position, you may be wondering what actions you can take to benefit you. One of the best follow up activities you can do is find out exactly why this has happened and what you can do to fix it for future applications if necessary. Being stuck with the confusion of why your loan application has been rejected will hold you and your finances back. So, we have put together some information as to why this may have occurred.

Understanding why it has been declined

There are many reasons why your loan application could have been declined. Therefore, we advise you to try your best to distinguish the basis that personally suits you. A couple of the most common factors include the following:

Credit Scores

Before lending you the funds you have applied for, lenders conduct a credit check. This is to understand whether or not they will be able to safely lend to you. A credit check shows a lender multiple different factors relating to you and your finances allowing them to make their decision. This means that your credit score plays a large role in the whole scheme of borrowing. Having a higher credit score increases your chances of being accepted for the loan massively, whereas if you have a low score, you are still able to access the loan but the chance of acceptance is lower. Thankfully, there are still options out there like bad credit loans to help people with even low credit scores get their hands on the loan they need. We offer access to the UK’s largest panel of lenders to help you along the borrowing journey.

Irregular or Low Income

Unfortunately, lenders cannot just lend to everyone who approaches them, especially if they have an irregular or low income. Having either of these will lower your chances of acceptance because you may earn too little to be able to afford the repayments. This would not only negatively impact the lender but also you personally. Along with this, having an irregular income means that you are unable to specifically guarantee you will be in a financial position to repay the loan. So, instead of the lender taking this risk, it is easier for both parties to avoid the situation.

If you are unsure which factor may apply to you we advise contacting the lender. They are usually more than happy to help you with your financial journey.

Improving your chances for future applications

Thankfully, there are plenty of ways in which you can improve your chances of being accepted in the future. Just because you may have been rejected recently does not mean that you will be turned down again. To make life easier when it comes to your finances, there are numerous things you can do which push you that extra mile, these include:

Working on your credit score

Linking this to the point above when ‘understanding why it has been declined’, working on your credit score plays a huge role when improving your chances for future applications. If your credit score does not look appealing to the lender, it needs improving. Working on your credit score is a process that takes time and cannot be completed overnight. Here at IMF Loans, we have multiple blogs covering ways to improve your credit score, click here to read more.

Fix any mistakes

There may be some mistakes that are holding you back from getting a loan, therefore these need to be pinpointed and fixed. Some of the most common mistakes or issues include existing debts and incorrect information. We advise you to check your credit report every 6 months to avoid any unwanted mistakes.