Rejected for a Loan? Stage a Comeback/ August 1st, 2020
Getting rejected for a loan can feel like a kick in the teeth. No way around it, rejection is painful. But consider looking at it from a different perspective.
Being denied for a loan tells you something you're not aware of or not acknowledging is going on in your financial situation. Take this opportunity to figure out what that is.
You can turn this around if you put your mind to it. Here's how to get started.
Find Out Why You Were Rejected
Upon reading "We are sorry but ..." in your rejection letter, you may feel the urge to pitch the letter into the trash.
Instead, read the whole thing. That letter will tell you precisely why your loan was denied. You have to know the reasons for the problem before you can fix it.
Were you late on paying bills? Are you already borrowing too much compared to your income? Maybe you need to work on paying down the debt you already have.
When you get a rejection from one lender, you may feel tempted to apply at other lenders, hoping you'll eventually get lucky. You're only postponing what you need to do—work to improve your credit standing. Also, each time you apply for a new card, your credit score gets a hit, bringing it down a few points.
Get a Copy of Your Credit Report
The denial letter will state which credit bureau the lender used in making the loan decision.
When you're turned down for a loan, you are entitled by law to a free "adverse action" credit report. This copy will not count against the free credit report you can get each year from each of the three major credit bureaus: Experian, TransUnion, and Equifax. Get a copy and check it over closely
It’s a good idea to review your credit report before applying for a loan to make sure everything in it is accurate.
What To Do If You Find Errors
Mistakes on credit reports are not uncommon. If you find any errors on your report, take three steps:
1. Contact the credit bureau to report the error.
2. Ask the bureau to send a corrected copy of the credit report to any lender that recently received the inaccurate one. The lender may reconsider your loan application.
3. Get your credit reports from the other two credit bureaus to make sure mistakes don't show up there, as well. Clearing up a mistake at one agency doesn't mean the corrected information gets passed on to the other two.
If you feel the errors are the result of identity theft, report this immediately to the credit bureaus, your creditors, and law enforcement authorities.
Get Expert Help
To fix your credit problems, start by talking with the folks at your credit union. Someone on staff may be able to work with you to devise a credit repair plan. Or your credit union may refer you to a free or low-cost outside counseling resource.
Don’t lose hope. With a bit of work and discipline, your credit problems can be resolved, and loan rejections can be a thing of the past.