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5 Steps to Follow if Your Loan Application is Denied

the words loan denied in red with a check mark

Online money lenders have become a good alternative for a large number of people. They are quite practical and very simple compared to banks. When it comes to quick access to a personal loan, online lenders are the most efficient. But you must keep in mind that on certain occasions these solutions may not be what is expected.

Even if you have access to different online platforms, it does not always mean you will be able to get approved. However, you do have a higher chance of getting approved online in comparison to loans obtained by banks.

Causes by which the loans are denied

  • If you are a person who is always asking for loans, but your credit level is not sufficient.
  • If you have a substantial amount of loans already and do not make payments on time.
  • Some lenders often reject people who are not of legal age or do not work.
  • In some cases, online lenders have a record of people who have a positive or negative balance with their financial bureau.

It is ever a fun experience to be rejected for a loan. But sometimes, it’s not even about being rejected. Perhaps you just haven’t met the right lender for you yet. Instead of guessing the reasons why your loan was denied and giving up. You should know that there are 5 steps you can take if your loan is denied.

5 Steps to follow if the loan is denied

1) Find out why they denied you: The first thing to consider is the reason why your loan was denied. The good thing about this is that by law it is your right to get that information from your lender. This law is known as the law of equal credit opportunities. This law states that the lender has a period of thirty days to present in writing why the loan was denied to the future debtor.

2) Is the denial based on correctable errors? Sometimes this is because a requirement was needed but it was not met. Therefore, it is important to know the reasons why the loan was denied. Now if your mistake is correctable then you should do everything possible to solve it. Other reasons that can be corrected are the following:

  • Insufficient income: This is one of the most frequent reasons for refusing consumers when requesting loan applications.
  • The amount of your loan may be too much: You could have requested a loan amount greater than 95 percent of the value that needs to be so it is possible that your loan is denied.

3) Denial due to a poor credit report is another major cause of denial. In some cases, this can be corrected if you contact the entities to which you owe them, by keeping up with payments on time and by keeping a record of your high credit cards.

In some cases, it may be because of an error. If this is the case, you must inform the credit reporting agency as quickly as possible. Send a letter explaining the situation in detail, and include a copy of your credit report with the defective information highlighted.

If your situation is different and you do not know how to raise the credit score, sometimes you can opt for money lenders online and compare their loan rates. Make sure to do a background check.

4) Get a second opinion: Some lenders have divisions whose sole purpose is to reevaluate loan applications. After investigating the errors in your credit report and correcting them, the investigating credit reporting agency will send the corrected copy to your lender. Contact your lender and follow up on the report with some questions of your own. You can even request a second opinion of the second level of review of the lender for loans.

5) Apply for a new loan:  Sometimes you may be unlucky and your loan application will be completely rejected, either because of the causes outlined above or a common error that can be corrected by you or external entities. If this is the case, just reapply for a new loan.

For more great college tips, check out the other blogs on College Basics.