What Should You Do if You’ve Been Turned Down for a Loan

Getting rejected for a loan is never easy, especially when you’re in a difficult situation and this isn’t the first time it happens. If you’ve just been rejected, there are things that you can do to find out why you were rejected and steps you can take to make sure it doesn’t happen in the future. There are also some alternatives you can consider if you run out of options. In this article, we’re going to tell you what you should do if you were rejected and what options might still be open to you if you have poor or no credit.

Find out the Reason for Rejection

The first thing you should do is ask the financial institution why your loan was rejected in the first place. If it had to do with your credit reference file, the financial institution should disclose that information to you and tell you from which credit agency they got your file from. Knowing this is very important since different agencies may have different records and the rejection might be the result of a mistake.

Once you know from which agency your credit file was pulled, you can then contact them for a copy. Look carefully to check if there are any reporting mistakes in there. In some cases, accounts that were closed might still be open on your records, or an outstanding debt that was paid hasn’t been reported. It is your responsibility to verify your credit file and have any errors corrected. Credit agencies have a clear set of procedures for correcting mistakes, so make sure that you contact them if you see anything wrong on your report and they will guide you through the process.

Stop Applying

Each time you apply for a loan or a credit card, it will trigger an enquiry on your report, except in a few cases. Repeated enquiries over a short time period will have a negative effect on how you’re perceived by lenders. They might assume that you’re desperate for cash and think twice about approving your loan. So, if you’re going to make applications, make sure that they are realistically attainable and that they’re spaced out.

One of the solutions could be to look for alternative lending options. They usually are more lenient as far as credit scores go and some won’t hard search your credit report. Here are a few other options you could consider.

Use Your Home or Car Equity

If you own a home or a car, you can always use it as collateral. Direct lenders will be more likely to grant you a loan if you have something to back it up with. They know that they’ll be able to repossess your assets if you happen to default. Of course, the biggest disadvantage with using your assets as collateral is that you may lose them if you can’t repay your loan on time. That’s why it’s essential that you only do this if you absolutely need the cash and you’re certain that you’ll be able to repay on time.

Join a Credit Union

Credit unions are in many ways similar to banks, but they have a community aspect to them. Credit unions are owned by the members and usually, have less stringent lending requirements than banks and other traditional lending institutions. However, the amount of credit you qualify for will be correlated with the amount of money you deposit. So, this might be an issue if you have no funds at all to deposit. But it’s also the closest thing you’ll find to getting a loan from a bank and it will allow you to pay your debt over a longer period of time.

Look For Online Loans

There are many lenders online who are open to applicants with lower credit. These lenders will often put more importance on the ability of the applicant to repay their debt than their credit score. Everyday Loans is one of them. When you apply for a loan from Everyday Loans, they won’t hard search your credit report to see if you’re eligible for a loan, so you won’t have to worry about your application affecting your future chances of getting credit. The application process is fast and all you’ll have to do is fill in an online form with your work, bank data, and personal information. Once the application is processed and your loan is accepted, your funds will be deposited in under 48 hours in most cases.

Conclusion

While getting rejected for a loan is never easy, there are plenty of options available to those who might have less than stellar credit. Make sure that you look at all the options available and refrain from committing mistakes that could aggravate your situation.