You need to know why your loan application can be denied, so it does not come as a shock when you find out that you have been rejected. It’s not always going to happen the way you want them to. People think they would automatically be approved if they came up with the correct requirements. While it’s true that most people are approved for loans, not all applications will be successful in getting approval.
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Top 9 Reasons Your Loan Was Denied
1. You missed the deadline to apply for a loan
The number one reason a loan is denied is that the borrower applied past the deadline date. Make sure you schedule your application before or on the due date to avoid late fees and having your application be denied.
2. You don’t meet the credit requirements
Not owning your property or not providing substantial collateral can result in your application getting rejected. To have more chances of being approved for a loan, ensure your credit score is high enough by getting your free credit score.
3. You have too much outstanding debt
Do you know that lenders assess your ability to repay by looking at how large a loan you can afford? Are you finding it hard to keep up with all your monthly payments? Taking out a loan can put more stress on your life, causing you to miss payments or default on your loan.
4. Your credit score is too low
If your score is below 650, you probably won’t be approved for any loans. It means you have poor repayment history and large outstanding debt. Alternatively, seek lenders who offer bad credit loans.
5. Your employment history is too short
If you’re applying for a loan and don’t have enough work experience, then you probably won’t be approved either. Your income should be enough to cover the repayment of the loan and any additional costs it may bring up.
6. You aren’t planning on paying off the loan
Some people get loans to pay for their daily shopping and entertainment costs, but lenders see this as a bad decision. They will deny you a loan if they think you will not pay it back.
7. You have several loans being offered to you
When looking for a loan, it’s important to consider the benefits of borrowing from one lender over another. Make sure that the interest rates and repayment costs are reasonable and compare these costs to other lenders.
8. Your income isn’t enough
While you may be able to get your hands on a small personal loan, it can be difficult to get a business loan if you don’t have an established source of income, especially if you haven’t been in business for long. The amount you make can determine if your business is considered established.
9. You don’t provide the proper documents required
When applying for a loan, they will ask you for certain documentation that proves your income, like employment status and residence. If you can’t provide all of this information, your application will be rejected.
According to Lantern by SoFi, “Grants are notoriously difficult to receive, primarily because there is so much competition for them.” To know more about the grants for women starting a business, talk to a professional consultant today.