If you have recently been refused a loan, you may feel unsure about what your next step should be. However, a rejected application doesn’t always mean you will be unable to get the financial help you need. It may just require a little more planning and understanding of your finances to find the right loan for you.
Before you start re-applying for more loans with different companies, it’s a good idea to find out why your application was refused. By doing this, you will know where to make amendments to increase your chance of being accepted for a loan in the future.
Common reasons for a rejected loan application
- A history of late or missed payments
- Numerous recent loan applications
- Not enough credit history to determine reliability
- Unstable employment record
- Incorrect information on your credit report
- Do not meet the lender's requirements
Most of the time, you should be able to request a reason for your rejected application directly from the loan company. Though it may not be detailed, it can give a general outline of why they chose not to lend to you.
Being rejected for a loan may negatively affect your credit score, and applying for multiple loans in quick succession can further damage your reputation. This is because it can indicate financial troubles to companies who are checking your report. They may not want to lend to someone who is seemingly struggling to control their finances. Before you start filling out new applications, you might want to consider how you can improve your chances for next time.
Build up your credit score
If the loan you need isn't time sensitive, you can spend some time building up your credit history.
Request a copy of your credit report to check your personal details are correct, as any mistakes could be hindering your chances. You can request a copy online through any of the three credit report agencies - Equifax, TransUnion, and Experian.
Once you have reviewed your credit report, it can be easy to spot the weaknesses in your financial history. Correct any misinformation, start making future credit payments on time and/or in full and close any accounts that are no longer in use.
The better your credit rating, the more likely you are to get a loan with a good interest rate. Lenders want to be sure you will repay the amount they lend you in the agreed time frame. Taking the time to show you are a reliable borrower who can make regular payments will improve your chances at landing a loan.
Check you are eligible before applying
Using an eligibility checker is a great way to see whether you fit the criteria for a specific lender. You can do this online and it will only take a few minutes. There isn’t much point applying for loans if you don’t meet the general criteria, as you'll more than likely be facing another rejection. Therefore, it is worthwhile to put in some extra time for research and to use the help that is available to you.
If you’re not money savvy and find it difficult to navigate your finances, you may consider seeking help from a free debt advisor. They can offer realistic advice and suggest achievable goals to help you get on top of your finances and avoid falling into more debt.
It is important to ensure the advice you are getting is truly free. Some advisors may start charging after the first session, which can be counterproductive. An alternative could be reaching out to a free debt advice charity, who can offer confidential support for your money worries over the phone, at no charge to you.
If you have been rejected but are in desperate need for a loan, and simply do not have the time to work on your credit score, there are still options available to you.
At Morses Club, we understand that feeling out of control when it comes to money can be tough. We offer small cash loans to help with those unexpected costs. Our loans aren’t right for everyone – you should only borrow what you can afford to pay back. If you would like to find out if a Morses Club cash loan is right for you, then read our FAQs for more information.