Why do I keep getting Declined Credit?

Ever find yourself thinking, 'I need a loan but keep getting declined'?

We all understand what falling short of money for personal needs feels like with this kind of inflation. People might be going through the same feeling that you are bearing. This financial crisis has made you resort to your last possibility, i.e., getting a loan or credit. So, you apply for credit from the lender but keep getting declined credit. It will make you feel even more directionless. Getting refused for credit at the peak of an emergency will leave you hanging to make your payments. 

A refused credit can disrupt your planning, forming a financial imbalance for you and your associates. If you get notified of being rejected for a loan with bad credit, take a step back and think for a while because the next steps will be crucial or a turning point. Not understanding the reasons behind your rejection will make a difference to you & also your credit ratings. It might make you escape further rejection and restrictions from future credit. Let us go through what grounds a lender can reject your credit. 

Reasons for refused credit loan

You would think in despair, "I need a loan but keep getting declined credit. Why would that be?". Let us culminate your worries and make you relaxed by citing the cause for your rejection.

1. Eligibility Norms

Did you go through all the terms & conditions along with the eligibility criteria of the lender? There would be a disclaimer saying there is no assurance of credit. Every lender will have its own set of eligibility criteria for the borrower. The lender evaluates your profile by considering various measures. Possibilities compelling you not to reach the expectation mark will lead to rejection. 

2. Errors in the Application

Here we are of the notion that why would we make a mistake while filling up our details. But they are some of the most common blunders we unintentionally tend to make. Filling up a loan application online without needing to leave the confined spaces of your home makes it awesome. Though, the moment you hit the wrong button, you end up with an error. So better to recheck your DOB or address to match your credit report with the credit bureau. 

3. Pending unsettled Loans

The lender will first consider your affordability to repay the loan over other factors. Suppose you are already managing some loans that you are paying up timely. It might make the lender think about your borrowing capability to repay. An increase in your debt to income would let the lender view that you would be unable to repay timely upon clearance of the loan. 

4. Income stability

The lender generally makes a thorough check on the primary way for you to be able to make monthly instalments. All of it would be only possible if you have been a salaried employee with a sufficient annual income. Your years of service are consideration norms for the lender as they are a good indicator of stability. Switching jobs too often could raise a red flag in the process. There are negligible chances of your loan approval being a self-employed individual unless you prove to the lender about your affordability to repay.  

5. Payment marker on your credit report 

The primary reason for you to keep getting declined credit would be the payment marker on your credit report. There are various payment markers on the credit report to make the lender a better decision apart from credit scores. 

When you make any late payments, it will show 1 & when you miss out on a monthly instalment, it will display D (Default)on your credit report. In such a way, various markers will reveal borrowers' creditworthiness to future lenders. If you have an unsettled CCJ (County Court Judgement) on your file, it will be there for at least six years. Individuals with a zero experience of credit or little credit history also sometimes leave the lender wondering whether to approve them for credit. 

6. Processing too many applications

In dire need of credit, don't rush in too many loan applications. You get yourself refused credit everywhere if you keep on applying in a short span. The lenders sense that you are currently unable to handle your finances. So, it is better to make a different credit application than to make the same one again. 

7. Low credit score partner 

Reconsider borrowing credit if you have ever taken a mortgage loan via a joint account with your spouse. Your partner's credit score can also influence the decision-making of the lenders. Having a financial association with your partner lender assesses both credit profiles. In the worst-case scenario, your partner bearing a low credit score will have a negative impact on your file. So before applying for a loan, get your profile separate financial. In return, it will make your credit score recover back on track. 

Conclusion

We know getting declined for a credit or loan might feel disappointing. But comprehending the reasons behind it might lead to a good scope of preventing you from lower your scores. It is always better to improve your score before applying for a loan.