There are thousands of loan applications that are rejected every day, so if you have been rejected for a loan then you are not alone.
Knowing the reasons why you were rejected for a loan though are not often divulged by lenders and banks as they each will have their own approval system in place. However, there are some common reasons as to why your loan application was rejected. Take a look at the reasons so that you know what you can do and improve on being able to get your loan approved in the future.
Rejected? Here is Why
Your Credit Score Could Be The Culprit
If you are in debt and have managed your debt poorly then it will show in your credit score. Your credit report and score can be accessed by lenders and if they don’t like what they see then they will reject your loan application. You are able to get your credit score and report so that you can see where you need to improve, so that you have a better chance of getting a loan in the future.
If you have been blacklisted or if you have a judgement against you then you will most likely be rejected for a loan. There are some online lenders that offer assistance and loans to those have been blacklisted, but be prepared as you may have to pay a high interest rate.
If you are under debt review, then generally credit is declined as the process focuses on getting you out of debt. Once the debt review process is complete then you will be able to access credit again.
Have a Garnishee Orders?
This is court order where deductions are made on your salary by your employer in order to settle debt that you may have with a third party like a store account, a bank, a short term lender and so on. This will show that you are bad at repaying money that you owe and will most likely show in your credit report, which means that lenders will reject your loan application.
Still wondering why you have been rejected…keep reading
You Can’t Afford It
When you apply for a loan, you will need to supply the lender with some information, which will include what you earn. Reputable lenders will assess if you are able to afford the loan and make the loan repayments. If they find that you won’t be able to keep up with the repayments because you have too many outstanding lines of credit, bills and such then they will most likely reject your application.
Your Job Might Play a Role
There are lenders who will refrain from lending money to those that potentially may not have a stable or future income. This means that contractors, freelancers and even small businesses may have a hard time getting credit. Your income will be looked at to see if it is sustainable and based on this a lender may decide to accept your reject your loan application.
If you are a job hopper, then you may not be looked at favourably because lenders might think that your job is not secure. You might also be rejected if you haven’t been in your current position for long as lenders prefer to see that you have had a stable job for at least three months and want the bank statements to show this.
You Have No History
If you have never taken a loan before then you may think that it is a good thing, but actually, this means that lenders have no way of knowing how good you are at repaying credit, which means they will be hesitant about lending you money. If you don’t have any credit history then you could open a store account or apply for a credit card, make small purchases and be prompt at repaying. This will help you to start building a good credit history and lenders will be more willing to grant you a loan.
Just a couple more reasons…
Is Your Info Correct?
When you fill out your loan application you have to be honest. This means you shouldn’t overinflate what you earn and be truthful about who you owe money to. If you lie, then you will be rejected and you could even be charged with fraud.
Age is Not Just a Number
In order to apply for a loan, you need to be over the age of 18 years, but you can also be too old for a loan. Generally, if you over the age of 75, you won’t be able to borrow a large amount of money like a mortgage, but you might still be able to get a short-term loan. If you are still earning money over the age of 75 then you could still qualify for a loan.
There are a number of reasons as to why your loan application might be rejected, but if you have a good credit score and history, have a steady income and show that you can make timely repayments then you will be able to get the loan that you need.