{"id":269,"date":"2023-11-19T21:36:51","date_gmt":"2023-11-19T21:36:51","guid":{"rendered":"https:\/\/flexmoney.com\/blog\/?p=269"},"modified":"2023-11-19T21:36:51","modified_gmt":"2023-11-19T21:36:51","slug":"top-10-reasons-why-your-loan-application-was-denied-and-what-to-do","status":"publish","type":"post","link":"https:\/\/flexmoney.com\/blog\/top-10-reasons-why-your-loan-application-was-denied-and-what-to-do\/","title":{"rendered":"Top 10 Reasons Why Your Loan Application Was Denied and What to Do"},"content":{"rendered":"

Having a loan denied is frustrating and disappointing. You may not understand why it happened or what you can do to make sure it doesn\u2019t happen again.<\/p>\n

Unfortunately, you\u2019re not alone. According to a recent study<\/a>, 21.8 percent of applicants were refused credit in 2023, the highest level since June 2018.<\/p>\n

So, what\u2019s going on? Your lender may send you an adverse action notice stating precisely why you\u2019ve been denied. Otherwise, these are the top 10 reasons you keep getting denied for loans and what you can do to prevent it.<\/p>\n

1.\u00a0\u00a0\u00a0\u00a0 You Didn\u2019t Meet the Minimum Credit Score Requirement<\/h2>\n

One of the most common factors lenders used to assess your loan application is your credit score. If you don\u2019t meet their minimum credit score requirement, you\u2019re immediately rejected for a loan.<\/p>\n

Regrettably, many lenders want to see a credit score of at least 640. However, that\u2019s not written in stone. You just need to find a lender that accepts a lower credit score or one that places more emphasis on other factors, such as your income. If you don\u2019t know your credit scores, you can access them for free online<\/a>.<\/p>\n

What To Do<\/h3>\n

If you keep getting denied for loans, your credit scores could definitely be the culprit. As a result, it makes sense to do whatever you can to improve them. This may include correcting errors on your credit reports. The information used in these reports are the basis of your credit scores. Get free copies of your credit reports from Esperian, TransUnion, and Equifax at AnnualCreditReport.com<\/a>.<\/p>\n

Carefully review the information in each of them to ensure they are accurate and up-to-date. Errors do occur. Luckily, the Consumer Financial Protection Bureau<\/a> explains what you should look for specifically. If you find mistakes, file a dispute with the particular credit reporting agency.<\/p>\n

When everything looks right, you will want to maximize your scores too. Start by understanding how your credit scores are calculated<\/a>. Legitimate negative entries on your reports may be less impactful if you pay off collections and bring delinquent accounts current.<\/p>\n

Alternatively, you can apply through a lender that places less emphasis on credit. For instance, FlexMoney offers some of the best Missouri online installment loans<\/a> available, but they do not have a minimum credit score requirement. If you earn a steady recurring income paid by direct deposit, you may qualify.<\/p>\n

2.\u00a0\u00a0 Short or No Credit History<\/h2>\n

Lenders look at your credit history, because positive information makes you less risky and the lender is more willing to grant you a loan.<\/p>\n

However, some applicants get their loan denied because they have little or no credit history. Building credit takes time, but it may feel impossible to achieve that if no one will give you a loan. Luckily, if this applies to you there are several things you can do.<\/p>\n

What To Do<\/h3>\n

If you\u2019ve never had a personal loan, you may want to apply through a company that places less emphasis on your credit. Your credit history accounts for up to 15% of your overall credit score, so choosing the right lender could be the tipping point towards approval. Anything less than 2 years is considered a short credit history.<\/p>\n

Even if you\u2019ve had other forms of credit such as a credit card or line of credit, an installment loan is another cup of tea. In this case, definitely seek preapproval through several other lenders that emphasize income, not credit. It won\u2019t affect your credit score and you can usually get a response within minutes.<\/p>\n

3.\u00a0\u00a0 You Don\u2019t Meet the Lender\u2019s Basic Requirements<\/h2>\n

Every lender uses their own criteria to determine whether or not you qualify for a loan. If you don\u2019t check these beforehand, you could keep getting denied for loans. Here are some of the basic qualifications for a loan<\/a> you can expect:<\/p>\n