Does your credit background hinder you from getting personal loans from banks and other high-street lenders? Being cash-strapped can be distressing, but being turned down for loans is a lot worse.
Well, don’t panic.
Different lenders set different thresholds for their loans—some are stiffer than others. But you must never give up when you fall short of the qualifications of one institution.
Your declined application doesn’t imply that you won’t get qualified elsewhere. Viva payday loans, for example, have partnered with the best lenders for unemployment payday loans 1 hour.
This guide will walk you through the reasons you have been rejected for an unemployment loan and what you could do to get back on your feet.
Top Reasons You’ve Been Rejected For A Unemployment Loan
1. Bad Credit Background
The credit background is the primary factor lenders consider when giving out a student loan, personal loan, or mortgage.
If you have a bad credit history, such as past undue collections, accounts, or bankruptcy, your credit history will not attain the minimum thresholds of most lenders.
You can always request your credit transcript from AnnualCreditReport.com, which is FREE. If the report shows that your credit background is too low, there are various ways that you can boost it.
Pro Tip: If you’ve been rejected for this reason, please apply for an unemployment payday loan 1 hour at Viva Payday Loans.
2. Loan Purpose Inconsistency
Most loans offer flexible options on how to use the borrowed cash. But some loan providers restrict your loan use.
Therefore, ensure that your purpose matches the loan provisions. For instance, if you want cash for professional training or certification, you can go for federal student or private loans.
3. Missing Information Or Paperwork
Typically, loans come with tons of paperwork, such as government ID, credit report, collateral documents in some cases, and proof of employment—pay stubs, tax returns, or account transcripts. If you lack any of these documents, you’ll more likely be rejected.
Before applying for a loan, ensure that your papers are in order. Although you might not need all of them, it is good to have everything at hand.
4. Error On Credit Report Or Negative Event
While having a good credit score is essential for loan approval, there could still be significantly negative occasions that can scare off loan providers. This is because a credit score can be built even after an adverse event like foreclosure or insolvency—within 16 to 24 months if you repay your debts diligently.
Some loan providers’ policies dictate that a credit score is not the ultimate qualification, thanks to events like these. For instance, some lenders will automatically reject borrowers with a history of going bankrupt even if their credit score is excellent at the time of loan application. So be keen to check all the adverse events that you’ve been through before applying for a loan.
5. Incomplete Loan Application
The details on your loan application determine your credibility, and loan providers will accept or decline your application depending on the facts in the paperwork you provide. Many qualified and deserving applicants will be rejected instantly because crucial details are missing or incomplete.
Therefore, carefully read and complete your loan application requirements. Please list all the documents they need, such as identity cards or salary documents. Also, carefully fill out the application form and go through it before submitting it.
What to Do When Rejected
If you noticed one or some reasons your loan application was rejected in the above listings, below are what you should do to enhance your possibility of being accepted in the future.
1. Evaluate Your Decline
Figure out the reason your loan application was turned down. Every lender that refuses to approve your loan must give you a statement explaining why the lender rejected your request.
Suppose the lender disapproved your request because of your credit report; this notification will explain why and the institution’s identity that provided the information. You are entitled to your credit transcript due to the turndown.
2. Check Your Credit Report
Examine your credit transcript for irregularities and challenge any concerning your financial record. As per research by the Federal Trade Commission, one out of every five customers has a credit report inaccuracy.
It’s probable, for instance, that your report featured information from someone’s account. Alternatively, if you’ve ever filed for insolvency, ensure your report doesn’t reflect any accounts that were dismissed.
3. Start Building Your Credit Score
Despite a complete credit record, lenders may still decline your application. This can mean that you have a poor credit score. Below are things you must check on to build a high credit score;
- Delayed repayments: If you’ve fallen behind on repayments, make sure you catch up and keep paying on time. Delayed payments may be recorded for many years on the credit transcript.
- Your debt-to-income ratio: Do you have a lot of credit card debt relative to your income? Reduce your DTI and overall credit usage by paying off your loans as rapidly as feasible.
- Credit use: Are you nearing the maximum limit on your cards? It’s essential to remember that every account limit, not simply overall credit consumption, is necessary. To improve your credit rating, strive to keep all of your credit balances under 30 percent.
4. Look For A Co-Signer
When you have no consistent income, have experienced financial challenges, or developing a solid credit record, submitting your application alongside another individual may enable you to be accepted.
You can engage a co-borrower to help you through the application. Besides, this can make you get a more favorable loan than you would have obtained independently, with a lower interest rate, a more considerable loan amount, and many more.
5. Reduce Your Loan Request Amount
Request a loan that is less than you require or have initially requested. Lower amounts of loans applied seem less risky, and it may help you be eligible by improving your DTI image.
Even though seeking for lower than you require may cause you to take longer to achieve your objectives, it may be an excellent cost-effective option.
Final Thoughts
While your loan application being rejected can feel like a personal failure, it isn’t one! Instead, it can offer you the opportunity to carefully scrutinize your financial status and improve it as a result.
Remember that lenders are always ready to offer you a detailed explanation of why they reject your request. You can then improve on the weaknesses they have highlighted for you and stand a better chance of getting a loan when you apply again.