Regardless of how accessible most lenders make their financial products, some individuals are bound to be refused when they apply for a loan. This, however, may not be as dire of a situation as it may seem. First of all, having one loan request rejected does not necessarily indicate an issue on part of the borrower. Depending on the financial climate and the state of the global economy, certain lenders may decide to limit the number of loans that they offer, without informing the potential borrowers. This having been said, if this is not the case and the lender refuses the loan as a result of an eligibility issue, there are a few things that individuals can do to figure out what the problem is and to solve it.
Ask the Lender for Clarifications
The refusal of a loan request does not always come with explanations, especially if the application was sent over the internet. However, individuals can get in touch with the lender and discuss the issue. Please keep in mind that this may require you to personally go to the bank because the lender may not be able to disclose personal information over the internet or the phone.
In most cases, the lender will not only explain the reason for the rejection of the loan request but also offer alternatives. If there are none, ask the bank clerk to explain what you would need to do to be eligible for the loan.
Check Your Credit Rating
There is a big chance that if your application is refused, your credit rating may be too low. Unfortunately, this information is usually not offered directly by banks, which means that you will have to verify it yourself. An individual’s credit rating can be checked using the websites of the major credit reference agencies such as Equifax, Experian, and TransUnion. Here you will be able to check your credit score, as well as your credit report. This should give you all the information that you need to understand why you were refused the loan.
Try Applying For a Different Loan or From One from another Lender
If you either have a low credit score or some other issue that has prevented you from getting the loan, it may be possible to be qualified for a different one. Look at the other types of loans offered by the lender, or at the ones offered by other companies. Keep in mind that every bank has its own eligibility requirements and standards when it comes to the borrower’s credit rating.
Check the Borrowing Options Offered By Online Lending Platforms and Services
If nothing else works and the lenders that you go to do not agree to give you a loan, there are other ways of legally borrowing money. There are hundreds of online platforms that enable users to borrow money without having to pass credit checks. Keep in mind that these platforms are legal to use and they obey the same laws that banks do. However, most of them do not report their transactions to any of the national credit reference agencies.
This means that borrowing money from them will not affect your credit score, and also that your financial history will not matter when deciding if you are eligible or not for a loan. In most cases, online lending platforms only require that users provide proof of identity, proof of income, and proof of address. This having been said, do not forget that most online lenders offer higher interest rates than banks. While it may be more likely to get a loan, it will be more expensive than what you would pay at a bank.