Why Can’t I Get a Loan?

why can't I get a loan

It can be a serious blow when your loan request is rejected. Understanding the reasons for decline can help you qualify next time.

Generally lenders are required to explain why an application was rejected. However, this might not be the whole story you need.

The main reasons for a rejected loan application are:

  1. An error in the credit report; errors include closed accounts showing up as open. Or it could be inaccuracies involving late payment. If you see an error, dispute this with the major credit reporting agencies.
  2. You have a bad credit score; this is one of the main reasons why you can’t get a loan.Many lenders require you to have a minimum credit score of 660-680. You need to be making timely payments to improve this. You may try applying for credit cards. Secured cards build your credit.
  3. You have too much debt; this is why you can’t get a home loan. Lenders look at your debt to income ratio. Having numerous debts raises a red flag. (Read our guide about debt management)

Why Can’t I Get a Home Loan?

A home loan is often issued against collateral. You thus can use your home equity to secure a loan. However, a lender will first check your monthly income. You cannot apply for a loan if you have not finalized the property.

A home loan may also put your property at risk. If you cannot repay the loan on time you can lose your home. Check the lender’s terms before applying for a home loan or any other loan.

Why Can’t I Get a Student Loan?

Getting financing during your education years can be tricky. You are expected to repay back the loan after graduating but what if you still do not have a steady income? Keeping up the monthly payments can be a challenge after graduation.

You can lower your installments by refinancing your student loans. This can help you free up cash flow. It is also a good way of keeping budget under control. Refinancing also helps save money on interest.

Minor Issues That Can Affects Your Loan Application

  • You forget to include work history or source of income
  • You earn less income
  • You have a record of late loan repayment

Review your loan paperwork carefully. You may sabotage your application carefully before reviewing.

You can take steps to increase your score. Carefully check reasons why you can’t you get a loan.

Lack of steady income is also one common reason why you may not get a loan. Some lenders expect you to make at least $24,000 per year to be eligible for a loan. However, there are lenders that don’t require a minimum income – read more about no income loans.

If you don’t get a loan, consider getting a second job. This can boost your chances of being qualified the next time.