Top Reasons for Loan Rejections
Your loan or credit card request can get turned down due to various reasons. Out of all the reasons, poor credit tops the list when it comes to rejection. Your credit score file will contain information about your name, address, details of any loans, number of credit cards, overdrafts or mortgages and if you have missed a repayment. Lenders will go through your credit file to find out your available limits, how much debt you have and if you have any history of bankruptcy. All information collected is then considered by the alongside their own additional criteria to decide whether it is safe to lend you and what the rates they should offer you. Other factors that a lender will consider ahead of considering your loan request includes-
Apart from poor credit, missed payment is another reason due to which your loan request may have got rejected. Every time you miss a payment on a loan or credit card, it leaves a scar on your credit score card that stays up to six years. Missing a payment in the past may bring the lender to a conclusion that you are not responsible and you may not make payments on time every month. To avoid rejection make sure you set up a direct debit.
No Credit History At All
Your credit report never takes into account the amount of savings you have in your bank account. It only considers your repayment history and the number of accounts you have. So, if you have never borrowed then you have no repayment history. In such cases when you have no credit history it can get hard for you to get accepted.
Applying For Too Many Credit Too Quickly
Every time you apply for a loan, credit card, mobile phone contract or car finance deal, it leaves a small mark in your credit file. Having too many such marks in a very short time, will give the lenders an impression that you are desperate for credit. This can also make it hard for you to get approvals.
Missing The Electoral Roll
Your loan is likely to get rejected if you are not listed on the electoral roll. So, ensure you are signed up to the electoral roll as lenders rely on the electoral roll to confirm your personal details such as name and address.
When you are in a rented accommodation there are greater chances of developing a poor credit rating. Having a temporary address can make you appear less stable to the lenders. Therefore, if you are going to move around a lot, make sure you sign up to the electoral roll so that lenders can keep a track of your history. Staying in the same house for many years will mean that you are less likely to miss debt repayments.
Changing Your Name
It can be surprising, but it is true that changing your name can be the cause behind your loan rejection. When you change your name it can become hard for the credit referencing agencies to track down your borrowing and payment history. So, right after you have changed your name, update your details on the electoral roll. You should also check your credit report to make sure everything has been updated. Having all details updated will ensure that your credit score will be calculated the right way and by using all of your past records, together with closed accounts that you had under your old name.
Do not panic if your loan request has been rejected. Try to check on your credit score to find out the reasons why your loan has been rejected. At times it could be some simple errors that you can easily rectify.