Declined for a personal loan? So relax

Rejecting a personal loan can feel like a hit in the pit of your stomach. It’s easy to get discouraged, especially when it delays debt consolidation plans or home renovation plans.

Instead of taking the rejection personally, use it as a motivation to build your credit and supplement your income so that you can get approval the next time you apply.

How to recover from a personal loan rejection.

Online lender Marcus from Goldman Sachs sends a reason within seven to 10 days of a rejection, says Elisabeth Kozack, Vice President of Product Strategy and Customer Experience at Marcus.

Common reasons for a Marcus credit refusal include poor creditworthiness and insufficient income to pay back the loan, Kozack says.

Making timely payments for all of your debts and keeping your balances down are two Steps to building loanbut don’t stop there.

  • Check your credit report for errors: Some of the most common mistakes that can affect your creditworthiness include payments incorrectly reported as late or overdue and accounts that have an incorrect balance, according to the Consumer Financial Protection Bureau.

You can receive free copies of your credit reports from once a year. Credit report error online, in writing or by telephone.

  • Get it Credit Builder Loans: Rather than giving you the money you borrowed, lenders keep it in a bank account while you make timely payments for the loan. These payments are reported to the credit bureaus and help build your score. You will only receive the money after you have made all the payments.

Lender loans are available through credit unions, community banks, and community development financial institutions.

  • Become a authorized user on someone else’s credit card: Ideally, the account holder has a strong payment history and the credit card issuer reports authorized users to all three credit bureaus.

Be ready for any loan application

NerdWallet tracks your credit score and shows you ways to build it – for free.

Your Debt-Income Ratio helps lenders determine if you owe too much debt. Divide your monthly debt payments by your monthly income to see your DTI ratio as a percentage.

Borrowers with high DTI rates (40% or greater) may be more likely to miss loan payments and have a harder time getting approved.

Check your budget for places where you could cut expenses and use the savings to pay off a debtand avoid taking on new debt before your next personal loan application.

Higher income will lower your DTI rate and can help you qualify for a loan. You may also not need to ask your boss for a raise.

Consider doing a side job like driving hail boxes or tutoring to put an extra hundred dollars or more in your pocket every month.

And when you reapply, state all sources of household income in the loan application – not just the income from your full-time employment, but also your spouse’s income, capital income, child support, alimony or military benefits.

Spend a few months getting your credit in shape and rebalancing your DTI. When you’re ready to reapply, choose a lender that caters to borrowers like you.

  • Online lender most commonly loans to borrowers with good or better credit scores (690 to 850 FICO), but there are some who accept lower credit scores. You can Prequalify online to preview the rates and terms you are likely to receive without affecting your creditworthiness.

  • Credit unions are nonprofit finance organizations that consider your entire financial picture and may offer cheaper credit options for bad credit (300-629 FICO). You must become a member of the credit union before you can apply.

  • Banks offer personal loans with low interest rates and discounts for customers with a good account. You likely need good credit to qualify.

Approach your next loan application again.

  • Collect documents. Lenders need to verify the information you provided on your application, such as: B. Tax returns to certify your income. The preparation of these documents can be the Application process go smoother.

  • Check all the information. Incorrect information in your application, such as the wrong address and incorrectly declared income, can lead to a refusal of credit. Check all the details again before submitting your application.

  • Add a co-signer. If you do not meet a lender’s creditworthiness requirements, you should consider: a. to add Co-signer with a good credit rating for your application. This can help you qualify and get you a lower price.

This article was written by NerdWallet and originally published by The Associated Press.

Previous JLL Capital Markets arranges a $ 68 million home loan for Canfield Park, Fairfield Metro
Next At that point, payments on your student loan will begin again