Why Was My Loan Application Rejected?

Why Was My Loan Application Rejected?

There are many reasons your loan application could have been rejected. Many people believe that a bad credit score is the main factor, however, this isn’t always the case. We understand that being turned down can be very frustrating and unhelpful, especially if you don’t actually know why. But, taking the time to learn the common mistakes and issues could help identify the problem for you. Even though you cannot immediately change the past, recognising your mistakes or weak points will allow you to make a stronger application in the future to guarantee your approval. So, what are some of the most general issues with loan applications?

Applying Too Much

Looking around and applying to multiple companies is usually a good thing in daily life. However, when it comes to loan applications, this is the opposite of what you want to be doing. Applying to multiple lenders and brokers can have negative impacts on your overall financial status. This is because whenever you apply for finance, lenders will conduct a hard credit check to ensure your reliability and get an idea of your management skills before accepting or declining your application. So, if you apply to multiple lenders you may find your credit score rapidly declining.

If you’re concerned or worried about not being directly accepted, perhaps you could consider applying through a broker. This way, your application will get passed through a large panel of lenders, increasing your chances of acceptance. Here at PM Loans, we are both a direct lender and a broker, offering you the best of both worlds for finding the loan for you.

Poor Credit Score

As we mentioned above, despite your credit score playing a huge factor when it comes to approved and declined applications, it’s not the only factor. As you will have noticed, many lenders offer bad credit loans to give everyone the opportunity if needed. So, depending on how low your credit score is, lenders will see you as more or less of a risk, therefore impacting other factors like interest rates.

However, if you have enough time we recommend you try and build your credit score. Even though it’s not a process that happens overnight, steadily making changes will positively impact your finances in the future. If you don’t know where to start and you’re searching for tips and tricks, look no further! Below are some ideas that could boost your score without much work!

Fix Any Errors

It is important to keep an eye on your credit report and ensure all of the information included is correct. If you notice something is wrong, it is essential that you contact the company providing the information so your score is not unnecessarily holding you back.

Register To Vote

When first reading this you may be thinking, why will voting help me with my credit score? However, the electoral roll confirms to lenders that you actually live at the address listed within your application.

Pay Back Your Credit On Time

Consistently paying back your debts and credit on time, no matter what the debt is will always have a positive impact on your credit score. Whereas, not reaching the minimum repayment will cause your score to decrease. Consequently holding you back in the future.

For more ideas or information regarding increasing your credit score click here.

Failure to Meet Eligibility Requirements

Meeting the requirements set out by the individual lender or broker plays a huge part in your acceptance. If you fail to meet their specific requirements, you will be rejected. Luckily, here at PM Loans, our eligibility standards are simple and reputable. Applicants must:

  • Be 18 or over
  • Reside in the UK
  • Be employed (in some circumstances other forms of income may be considered)
  • Meet the affordability and credit checks that both we and our lenders request

Just because your loan application was rejected does not mean that other lenders may not accept you either. We don’t advise applying to more lenders or brokers straight away, however, when you start again it is important to find a lender which will work for you.