Home » Overcoming Loan Rejection » Reasons Leading to Loan Rejection

Here are other possible reasons which can contribute to the loan denial:

Credit History

Lenders use your credit report to access your loan eligibility and the types of risks you pose. Your chances of getting approved can be ruined by having a late payments history, recent bankruptcy, high credit card debt or defaults on other loans.

Information Inconsistencies

Your lender might have found out that the information you submitted during the application was wrong. For instance, you may have written that your income is $200, but later find out that you earn $300 when they contact your employer for verification.

Unemployment/Lack of Adequate Income

Maybe your lender found out that your income is not sufficient to cover for the loan. This is common in the unsecured loans where you don't give collateral.

Multiple Debts

Lenders look at the number of loans you have before they add another one. More than half of your income should not be directed towards loan repayments. If you have many credits, chances could be high that your loan was rejected on that ground.

Lack of New Documentation

If your lender asks you to provide more information, be sure to do so. Your loan application will not be approved if your documents file is incomplete. However, if they keep asking for the same information every time, that could be a scam, keep copies of all the documents you submit to your lender.

A Large Loan Amount

Personal Loans can be used to consolidate the existing debts. The application may however not be accepted if the amount you are asking for is too much. Even if you are not servicing other loans at the time of application, a substantial loan amount may not be accepted especially if it will take most of your income.

Too Many Rejections/Applications

Every loan application that you make is usually recorded in the credit report. Also, some lenders make inquiries every time you apply for a loan. Too many inquiries are considered to be hard, and they can hurt your credit report, and cause loan rejection. Be sure to check beforehand if the loan you are applying for is a no credit check loan before applying for a loan.

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