Finding out that you have been denied a loan can be a terrible experience, especially if you don’t know why or how to fix your financial situation.
First, reach out to the lender and ask if they can provide the reason why you were denied. Once you can pinpoint the exact cause, it will be easier to fix. Here are some of the major reasons why you may be rejected for a loan and what you can do to solve it.
Not enough income. Lenders will look at the minimum monthly payments for the loan and compare it to your monthly income. If they feel you are at risk at not being able to make your payments, your loan may not be approved. Obviously, fixing this problem isn’t as simple as ‘make more money’ or else everyone would do it. However, you can get around this. For example, if you were denied a car loan, try saving up for a larger down payment, which will help lower your monthly payment.
Too much debt. Often, your loan will be rejected because you carry too much debt through credit cards or other loans. Before applying for another loan, come up with a plan to start paying down some of your existing debt.
Low credit score. If you have a low credit score, you are more likely to be denied a loan. Before applying, make sure your credit score is in good shape. When you apply for a loan, a hard inquiry takes place on your credit, which knocks your score down even lower.
You need to look around. Sometimes, it’s just a specific lender that won’t approve your loan. If you feel confident in your credit score, you can make monthly payments, your existing debt is in control, and your loan is for a valid reason, try looking at a different lender. Many credit unions will have their lenders work with you to make sure that you’re getting the best solution.
Need help applying for a loan? Contact the experts at Cyprus Credit Union online at www.cypruscu.com.