Business

Five reasons to reject a personal loan

Wouldn’t you like personal finance to be a required course in college? Unfortunately, many of us learn by mistake. When you need a personal loan and are turned down, you may find yourself puzzled about what went wrong and how to fix it. Here are some clues.

NO CREDIT

No credit is a situation where you have never used credit and therefore do not have a credit history for the bank to review. They have no way of making an informed decision about whether or not to pay off a personal loan based on your credit history. No credit is worse than bad credit. Qualifying and making regular payments on these types of introductory credit forms can beat a “no credit” score:

Student loans

Secured credit card (includes a down payment amount)

Being added to the good credit of a parent or spouse: card, car loan, etc.

LOW CREDIT

Low credit takes several forms. If you are using more than 30% of your allowable debt, it can negatively affect your score. Too many inquiries when looking for loans will also affect you a lot. Lapses in payment, defaults or bankruptcies are giant red flags and rebuilding can take a long time.

Other things that lenders may consider is whether or not you have significant assets in the event that you default on the loan. They also check to see if your debts are diversified or if you only have one type of debt.

ENTRY

Generally, proof of income is required when applying for a personal loan. If you are unemployed or underemployed, it can work against you in the loan approval process. Lenders may also require an employment history to see how long you’ve been with your current employer and to determine if you normally have job stability. Frequent job change or loss will tell the creditor that your payments may not be reliable.

PURPOSE OF THE LOAN

Believe it or not, your application may be rejected due to the proposed purpose of the loan. Financial institutions have the right to set the parameters surrounding your disbursements and can accept or reject your request depending on what you want to use the money for.

BLACKLIST

If you have defaulted on a debt in the past, your name may be placed on a “Not Lending” list, also known as a “Black List.” This will follow you for a long time and is difficult to erase. If you resolve debt problems, obtain documents to prove resolution.

NO LOAN WITH CREDIT CHECK

If you need a loan now but are concerned that you may not qualify for a personal line of credit, you may qualify for a no credit check loan. You could be on your way to a better financial future in no time!

Leave a Reply

Your email address will not be published. Required fields are marked *