Loan request denied? It’s because of this!
Is your loan application denied? Have you ever filled out a credit card application or tried to make a personal loan if without knowing why the request was denied? Interestingly, even if you have used credit in the past, you may still have rejected credit requests, especially when applying for personal loans or credit cards.
There’s nothing cool about experiencing such rejection, but this can be used to pay attention to how you are managing your money and how you are using credit, and for sure some things need to change. That is why it is important to understand why your application for loan, card, financing or personal credit was declined in banking or financial institutions.
Mounting your credit profile
To tell you the truth, credit decisions are rarely executed by a real person these days. To get an idea, this week I sent a request to increase my credit limit on one of the cards I own and, the process was completely automated, the approval did not take less than a minute.
These decisions are practically made by digital algorithms, that is, they are complex equations used by creditors to weigh the risks of the client not being able to pay the money that the banking or financial institution lends, is also taken against the rewards, that is, the amount of money that the lender will earn in the transaction with the interest rates when releasing the credit. Rarely is there human intervention involved in the process.
What is your credit score?
Creditors generally set the criteria for certain financial products and what fees should be applied. If you meet the criteria, you are usually in and if you do not meet the criteria, you may be refused or limited in purchasing some credit products with less favorable terms like: higher fees and charges etc. This review almost always includes a review of all of the information on your credit report, including your payment history, the amount of your debts, who you owe, the duration of financings, as well as the loans you have recently requested.
All these and more factors may be resulting in a denied loan application. Every time you make a credit application, the credit score system will be used by lenders thanks to Serasa Experian and Spc. In the credit score system up to the number of times you have applied for credit and the frequency of your attempts to get credit are taken into consideration. Depending on the amount of debt and card loans, the institution that takes care of this can quickly understand that you appear to be somewhat risky in having more credit and reducing your score temporarily.
If you qualify for a loan or credit card
You may not qualify for a loan or credit card simply because your credit score is too low to meet the required requirements. But this can fortunately be corrected over time simply by using your money and current credit wisely. As? Making your bills and payments up to date, and keeping your balances low (or without any financial lingering).
A lender can deny your personal loan application simply because you have not made the current payments on time or because you are short on your current address (insufficient time). Or because your salary does not reach enough to meet the requirements for a loan, the release of a credit card or loan product.
Whatever the reason for the denied loan application, or your credit application, the lender in question is required to send you a notice in the mail detailing why the application was rejected. Once you know the reason, you can take active steps to solve the problem. Make sure you do not risk another credit rejection simply by requesting at another institution immediately.