Many times, it may happen that you apply for a loan, but the approval is declined by the lender. If the lender rejects your loan approval, it is generally because you do not meet the eligibility criteria of the lender. There are rare chances that the loan approval may be declined because of an error at the lender’s end. However, it is essential that your next move is dependent on the kind of loan that you had applied for because the approach would be different for different types of loans.
Here is what you can do when you have been rejected for a loan.
Find the reason of rejection
Finding the reason for rejections is important if you want to resurrect your low credit score. It is also essential for checking your credit report and errors, if any. If there are errors, you can show a proof of them to the lender and reapply for a loan. If there aren’t, then you need to start paying all your bills and dues in time to improve the credit score.
Look for someone to co-sign your loan
If you happen to be young and earning without having required using credit cards or applying for loans or investing in anything in the past, then asking your parents to co-sign a loan might be a good thought.
However, many consider this as a last resort option. It is because the loan then becomes a ship. If one of the two is a defaulter, the other must pay the loan. And if none of them can, then both will suffer from a fall in credit scores apart from being in the stress of paying it back.
Avail of small loans from multiple lenders
The smaller the amount of loans, the higher will be the chances to get an approval. A smaller home or car or personal loan is a much better and safer proposition for lenders.
Trying to get smaller loans from maybe not just one, but two to three lenders can help as well, without affecting your credit scores at all.
Look for financial institutions that provide bad credit loans
If a loan approval is declined, it may have a negative impact on your credit score. This may sound unbelievable but there are many financial institutions that provide loans to people with bad credit score. Even after conducting extensive research, you need to be cautious because chances are that such lenders may be unethical and may assure to offer you a loan by charging various fees and higher interest rates just to extract more from you.
Apply for a new loan after some time
The failure of one lender to offer you a loan doesn’t mean that all other lenders will decline your loan approval. This is because all of them may have different parameters to consider before assigning you one. This also can mean that you should improve your finances and wait for a few days after your approval is declined. This will increase your chances of finding a lender and getting approval.
