Nobody applies for a personal loan for fun. They do it to take care of business — whether it’s to help cover an essential car repair or to handle an unexpected trip to the doctors.
In times like these, getting the news that your personal loan application has been denied can be crushing.
Unfortunately, far too many people face rejection at times when they need it most. If you’ve received a rejection notice, do you know what to do? Here are some clever ways to beef up your next application.
Check the Eligibility
When a lender has a list of requirements, you have to meet all of them. Not half or three-quarters. You need to pass this test with a 100%.
Broadly speaking, these requirements tend to include basic personal information to confirm your identity, finances, and creditworthiness, so you’ll likely have to share contact details and your credit score.
Credit scores may play a huge factor in whether you’ll be approved. Traditional lenders often require you have a prime score before they’re willing to grant you funds. They consider a low score a warning sign you may struggle to repay your personal loan on time.
If you have a subprime score, try looking for direct lender installment loans for bad credit. You may apply now for an installment loan for bad credit, provided you meet all the other eligibility requirements.
Review for Errors
It doesn’t matter what kind of loan you apply for; you’ll need to fill out some kind of paperwork to get it. This red tape can vary from a brief online application that takes minutes to complete to lengthy questionnaires that take a deep dive into your finances.
This paperwork fulfills several functions. For one thing, it tells your lender what financial product you want and how much money you want to borrow. For another, it verifies your identity to ensure you are who you say you are. They check that the contact details, banking information, and employment history match your name.
If there are any errors in your application, your identity comes into question. A slip of the finger that mixes up your bank account, birth date, or social security number will mean the details you shared don’t add up and a lender will likely reject you.
Apply with a Cosigner
Sometimes, you aren’t denied for one reason but many. When you’re rejected because you don’t earn enough, too much of your income goes to existing debt, and you have bad credit, you may consider switching to a cosigner personal loan.
A cosigner is someone you trust who will apply for your personal loan alongside you. By doing so, they agree the lender may check their credit and, if they approve you, they’re legally responsible for any payments you miss.
Naturally, asking someone to be your cosigner isn’t easy, as they’ll be shouldering a lot of the risk of your personal loan. Learn how to discuss this arrangement in an open way to improve your chances of convincing your loved one they won’t have to pay your loan on your behalf.
Being rejected for a personal loan is frustrating at any time, but now, it can be devastating. Luckily, one lender doesn’t speak for all financial institutions. You may have better luck by changing the way you apply.