Five reasons for rejecting a personal loan

Don’t you wish personal finance were a mandatory course in college? Unfortunately, too many of us learn by mistake. If you need a personal loan and are rejected, you might be confused about what went wrong — and how to fix it. Here are some hints.


No loan is a situation where you have never used a loan before and therefore do not have a credit history that the bank can verify. You don’t have a way to make an informed decision about whether or not to repay a personal loan based on your credit history. No credit is worse than bad credit. Qualifying and paying regularly for these types of introductory forms of credit can overcome a “no credit” score:

· Student loans

· Secured credit card (including deposit amount)

· To be added to the good credits of a parent or spouse: card, car loan, etc.


Low credit takes various forms. Using more than 30% of your eligible debt can have a negative impact on your score. Too many requests from the search for loans will also hit you hard. Payment defaults, defaults or bankruptcies are huge red flags and can take a long time to be rebuilt.

Other things lenders can look at are whether or not you have significant assets if you default on the loan. They also check if your debt is diversified or if you’re just carrying one type of debt.


When applying for a personal loan, proof of income is usually required. If you are unemployed or underemployed, this may work against you in the loan approval process. Lenders may also need a work history to see how long you’ve been with your current employer and to determine if you typically have job stability. Frequent job loss or change will tell a creditor that your payments may not be reliable.


Believe it or not, your application may be rejected based on your proposed purpose for the loan. Financial institutions have the right to set the parameters for their withdrawals and can accept or reject your request depending on what you want to use the money for.


If you’ve previously defaulted on debt, your name can be put on a list of who you can’t lend to, also known as a “blacklist.” This will haunt you for a long time and is hard to delete. When you solve the debt problems, get documents to prove the solution.


If you need a loan now, but are concerned that you may not qualify for a personal line of credit, you can opt for a No credit check loan. You could be on your way to a better financial future in no time!

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wendy encarnacion

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