Moving Forward After a Loan Denial

    8/23/2023
    3 minute read
    Steps to take after being denied a loan.
    Applying for a loan can be a nerve-wracking experience for all of us, especially if the funds are needed for an important expense. But being turned down for a loan doesn't mean all hope is lost. There are steps you can take to improve your chances of being approved in the future.

    Understand the reason for the denial. Lenders are required to disclose the reason for denial. This information can help you identify areas of your finances that need improvement like your credit score, income, or debt-to-income ratio. Ask the lender for the specific reason why your loan application was denied and focus on improving that area before applying for your next loan.

    Check your credit report. Your credit score is calculated using these five factors: payment history, current debts, length of credit history, types of accounts and recent credit activity. Credit is a major factor in your loan approval so it’s important to check for errors and report any found to the credit bureau. How to access your free credit report:
     
    • If you’re a Credit Human member, you can check your credit score and report at any time by accessing the Dashboard through mobile and online banking.
    Create a spending plan. If you were denied a loan due to insufficient income or high debt-to-income ratio, focus on reorganizing your spending plan. A spending plan will help you manage your finances better and demonstrate to lenders that you are responsible with your money.

    Reapply with a co-signer. If your credit score or income is the reason for the denial, consider reapplying with a co-signer. A co-signer with a strong credit score and income can improve your chances of being approved for a loan. Keep in mind asking someone to cosign for you is a significant decision as it affects their finances if you cannot make payments.

    Being turned down for a loan can be discouraging but it’s important to know the steps you take to improve your financial situation will require time and patience. Make an appointment with a Member Relationship Specialist to receive personalized guidance and help prepare you for the next time you apply.

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