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Have you just been turned down for a loan? Are you
wondering what you should do now? Below is information
that will help advise you what the proper procedure is
for someone in your situation.
When denied for a loan, the best thing you can do is
find out why you were turned down. By law, credit
issuers must inform you their reason for denying you
credit. They will provide you with a letter, with
explanations as to what factors were used in determining
your non-approval. You will also receive information on
how to receive a
credit report copy from
the reporting bureau the creditor used to obtain your
information and process your request.
Once you receive your credit report, go over it very
carefully. Look for all red flags and negative marks.
This can include late accounts, collections, judgments,
liens, bankruptcy filings, or anything else that may
allow lenders to label you as high risk. Learn more
interpreting your credit report.
Any type of negative mark will be present on your credit
file for seven to ten years. If you identify any
information that is inaccurate or out-of-date, you must
take steps to remove this data by filing a
reporting bureau. Check out a
sample dispute letter.
In addition to looking for errors, you should examine
credit score. Your credit score is a major factor
used by lenders in their decision making processes. Your
credit report will have a breakdown of your credit score
and what factors are impacting your score and credit.
Some reports even have calculators that allow you to
hypothetically determine what your score can be as a
result of different scenarios. For example, you can get
an idea as to how your credit score will improve as a
paying off credit card debt.
When going over your credit report, it is possible that
you may discover that you have become a
identity theft. If this is the case, you must take
action immediately. You will need to report your
identity theft to all three credit reporting agencies as
well as law enforcement. This will make it easier for
you to remove negative info from your credit report.
Once you have thorough gone over your credit report,
compare your denial letter with your findings. Does the
information match? If the answer is yes, you have a head
start at fixing your problems that are making it
difficult for you to obtain credit. If the information
does not match, there are likely other reasons as to why
you have been denied. Possible reasons for rejection can
be too little income, length of time at your current
residency, errors in your application, etc.. You can
find out the exact reason why you were denied by calling
the lender's customer service line.
Wait at least a few months before you decide to apply
for any other type of loan or credit. It can take 6-12
months before you see any sort of results of improved
credit and score. A good idea would to be enroll in a
credit monitoring program. This will allow you to check
your credit profile as frequently as you want. Learn
more about the
benefits of enrolling in a credit
Once you have determined that you credit it as at a point
where approval for a loan or credit card is likely, go
ahead and try applying again. Keep in mind, that every
time you apply for any type of loan,
your credit is
adversely affected as a result of the inquiry. There is
no point in applying for loans at multiple sources. If
you are denied by one provider, it is likely that you
will be denied by all other financial institutions.
If you need money now and can not wait to improve your
credit, consider asking a family member to lend you some
cash. Or, you can
apply for a no credit check loan for
up to $1,500.
Take being denied credit as a learning experience. As a
result, you'll learn
how to improve your credit and make
better decisions financially in the future.