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What to Do When Your Loan Is Rejected

Nov 13th 2013 at 1:34 PM

It’s not shameful to be rejected for a loan. However, the real shame would be giving up afterwards. Credit issues, loss of a job, ill health or divorce are at the top of the list of reasons why loans are turned down. Instead of focusing on the negative, be realistic and take steps to fix your problems. This way, when you reapply, there’s a smaller chance of being rejected again.

If your debt is piling up and you were planning on taking out a loan to pay some of it off, reach out to a free debt adviser as soon as you can. He or she can offer precious advice on how to avoid getting deeper into debt. If you were planning on using the loan to finance a purchase, such as a new car or gadget, consider putting your shopping on hold. Take time to fix your problems before reapplying for another loan and rebuild your credit score in order to qualify for the interest rate you are hoping for. We have some tips on how to get your financial health back on track, below.

Find out why you have been rejected

Most people resort to wallowing in self-pity when they find out their loan application has been rejected. That’s not helpful at all. Contact your lender right away and ask for details on why your loan was rejected. They can explain where you stand and what problems need to be fixed to get your loan approved next time.

Don’t reapply right away

Every time you apply for a loan, your credit score goes down. So reapplying for a loan right after you’ve been rejected can do you more harm than good. However, if you make all your applications in a two week period, they count only as one inquiry. Apply for loans online to save time and keep you application period short. If that two-week window is over, hold back.

Focus on fixing the problem

Once your lender explains why your loan was rejected, start thinking of ways to fix the problem. Consider getting a second job or a higher paying one, start paying your bills on time and come up with a plan to reduce debt. All these steps will help rebuild your credit score so that you won’t have any problems next time you apply for a loan.

Get help

When it comes to financing, there are some skilled specialists out there that can be of assistance. The good news is that a lot of their services are inexpensive. Contact a financial advisor in order to help you sort through your records and offer advice on how to fix your financial issues.

Check your credit score

If you haven’t done this before applying for the loan, do it now. Obtain a copy of your credit report and look for incorrect entries or outdated information. Correct any mistakes you find.

The most important thing is not to panic after getting rejected for a loan. No debt problems are unsolvable. By learning to live on a budget and avoiding unnecessary spending you will eventually get your financial troubles in order. Good luck!

 

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