It’s frustrating when you need funds, feel like you should be qualified, but then get turned down. If your loan was not approved, don’t give up hope. There might be a straightforward explanation as well as a simple solution.
Step 1: Check the requirements.
Before you despair, be sure that you met the requirements of the loan. If you left off any part of the requirements, your application won’t be approved. The requirements for a personal loan include:
- Proof of a regular income.
- Proof of residency
- Be at least 18 years of age
- Have your own checking account
If you don’t have any of those basic requirements, you can count on your loan application being
rejected. While some things you may not have control over, like your age, others may simply require find in the right evidence before you apply again. Be sure you have your checking account numbers. Find proof of your steady income and residency like paycheck stubs or a driver’s license.
If you simply don’t have a regular income or you aren’t a residence, a personal loan may not be possible for you until you have met these minimum requirements.
Step 2: Borrow only what you can afford.
Your income is a prime consideration for your personal loan. The lender won’t lend to you if you can’t make the payments necessary to repay the loan. Check to be sure the loan request you’ve submitted is realistic. You can’t make only $2,000 per month but ask for a loan with payments that are $1,000 per month. It’s not realistic and lenders will deny your application.
If you have met all other requirements, including proof of steady income, the problem with your
application may stem from the amount you requested. Double-check your figures and determine what amount is the least you need to borrow to get you through your current situation.
Reapply for the loan using a smaller loan amount with correspondingly smaller monthly payments. If the issue with your original application was simply the dollar amount, you may be approved for the new option with reduced payments.
Step 3: Consider your length of employment.
Lenders want to know that you are steadily employed. For most lenders, that means you can show evidence that you have been employed in the same job for at least three months. If you just started a new job or you’ve only been employed with your current company for a month, it may be too soon to ask a lender to borrow money.
Your work history and steady paycheck are prime considerations for a personal loan. Lenders don’t want to risk approving a loan and its corresponding payments for someone who is routinely in and out of work and won’t be able to make those payments by next month.
If you’ve been employed for less than three months in your current position, consider reapplying for the personal loan after you’ve been working in your current job just a bit longer. The longer you’re employed, the more credit-worthy you are likely to be considered.
Step 4: Doublecheck your lender’s credit requirements.
There are lenders who are willing to meet borrowers anywhere along the credit score continuum. If you have fair or bad credit, be sure you’re working with a lender who accepts applications from those with scores less than 89. Some lenders will only work with individuals with good or great credit.
If that’s not you, your loan application might have been denied simply due to credit score. In some cases, you may have been denied a loan simply because you have no borrowing history and therefore no credit score at all.
Shop around for a lender who doesn’t focus on credit score. These lenders will be more interested in your income, and therefore your ability to repay the loan. If you’re not sure if your credit score was a determining factor in your loan decision, check your FICO score and request a copy of your credit report to check for any payments you have in collections, multiple derogs or late payments, or bankruptcy filings that may still be lingering even years later.
Step 5: Confirm all information is entered correctly.
There’s a chance that you made a mistake on your application and simply didn’t notice it. If you made a mistake on your application, perhaps a wrong number in an account number or a misspelled street or personal name, your application can be denied.
What you consider to be a typo would read as incorrect for the lender, and incorrect information can lead to a loan rejection. You may be able to scan the confirmation email or page that’s still up from your application, or you might just have to go through the process again to be sure it wasn’t a mistake or a typo that cost you a loan.
If you apply for a new loan, double-check each entry to be sure you’re putting down the right
information. If your application requires attachments, perhaps copies of your paychecks, be sure that you’ve attached the correct documents to your application – or that you’ve attached them at all. Missing support documents can certainly get your loan denied as well.