What To Do If You're Denied for A Loan
Getting rejected for a loan can feel like a kick in the teeth. No way around it, rejection is painful. But a loan rejection may be a gift in disguise. All too often, borrowers get the loan they want and end up wishing they hadn't because they can't afford the payments.
Lenders have good reasons for denying loans; they need to know you will be able to repay the amount you borrow from them. With some effort, you can turn your credit situation around so that you get approved for a loan you can afford the next time you apply. Here's how to get started.
- Find out why you were rejected: Upon reading those "We are sorry but …" words in your
rejection letter, you may feel the urge to crumple and pitch the letter into
the trash. Instead, read it, in full. That letter has useful information about
the exact reasons for your loan denial. Maybe you're late on paying bills, or
the lender feels you're already borrowing too much compared to your income.
- Get a copy of your credit report: The denial letter also will state which credit bureau the
lender used in making the loan decision. And it will tell you how to contact
the agency to obtain a free copy of your credit report. Get a copy and check it
over closely.
- What to do if you find errors: Mistakes are not uncommon. If you find any errors on your
report, contact the credit bureau. Ask that a corrected copy be sent to any
lender that recently received the inaccurate report. Check for errors in your
report at the other two bureaus, too.
- Get expert help: Start
by talking with the people at your credit union. Someone there may be able to
work with you to devise a credit repair plan, or you may get a referral to a
free or low-cost outside counseling resource.
With a little
investigative work and some clean-up, you'll be on your way to getting a "yes"
on your next loan request.
FAQ
What should I do first if I'm denied for a loan?
Read your rejection letter in full. It contains the exact reasons for your denial, such as late bill payments or borrowing too much compared to your income.
How can I check my credit report after a loan denial?
Your denial letter will state which credit bureau the lender used and how to contact that agency for a free copy of your credit report. Review it closely once you receive it.
What should I do if I find errors on my credit report?
Contact the credit bureau and ask that a corrected copy be sent to any lender that recently received the inaccurate report. Also check for errors with the other two credit bureaus.
