Once a loan application for a loan is completed to borrow money for a specific purpose, the potential borrower eagerly awaits the result of the application so that he or she may receive the funds needed to achieve his ambitions, whether for business, car purchase, or holiday.
A declined application potentially means that a life goal is left unfulfilled. Lenders refuse loans based on a person’s credit-worthiness and loan default risk. If you’re refused a loan that you need in emergency because your credit history isn’t the best, it may be worth looking for bad credit loans direct lenders, as they may be more willing to approve your application. The criteria used to determine credit-worthiness and the ability to repay loans may differ between lenders and creditors.
Those that have experienced a loan application decline may register with a credit checking agency to obtain their personal credit score and a credit report. A credit report provides the information needed to understand how the credit score contributed to the loan refusal.
Common reasons people are turned down for loans include:
- Not being registered on the electoral roll for voting
- Being a victim of a credit fraud and identity theft
- Defaulting on loans historically
- Having County Court Judgments (CCJs)
- A lack of credit history or interest payments
- Opening too many accounts and leaving some inactive
- Applying for too many payday loans in a short space of time
Some people with suitable credit scores may be declined loans. When this happens, it is important to understand why, including the creditor’s assessment criteria, so that the underlying cause may be addressed. Too many loan rejections can also be detrimental to future loan prospects.