A declined personal loan request brings a wave of disappointment towards applicant. However, a little planning is quite helpful to lift-up the chances of approval when declined initially. Here we will discuss some techniques which are basically DIY type and can help a lot. One thing to keep in mind is that – strategy for increasing your approval chances may not be always quick and instant.
Identify the reasons for rejection
The very first step is to identify the reason which is the real cause that you weren’t approved. After that it will be an easy task to determine the real remedy and fix the problem.
The most common reason which can cause a declined personal loan when you apply at LendingClub include;
- Short Credit History: Most of financial companies do not feel an applicant feasible when they have less than 3 years of credit history.
- Debt/Income Ratio: If larger part of your monthly income is tied up to pay loan within a specific period, then you can simply get a rejection. You must have to maintain a D/I ratio below 30% to ensure instant approval.
- Overdue Payments: If your credit report shows late payments on your account with recent lender, then finance providers think twice before approval.
- Higher Credit Utilization: If you are using your entire credit limit at any given time, then it is more likely that a finance provider will decline your application.
All of the above mentioned reasons do not cover all aspects for any given rejection. However, some more online research can be helpful to determine more causes and respective steps to fix them.
Instant steps one can take as a measure to improve
- Credit monitoring
After rejection or decline for a personal loan application, consider a good point to access your credit score and credit history. There are many platforms available now a days where you can find credit scores for free. Give some of your precious time for researching and understanding your credit history and tips to approve any weaknesses.
- Think & Plan before acting
Before you apply again after rejection think and try to find any link between credit factors. For example if you are utilizing your credit cards more often with full credit limit this can increase your D/I ratio and credit utilization ratio in adverse manner. Try to manage things one by one at any given time and shift your profile towards favorable side with the help of your moves. Just focus on improving Debt/Income ratio and credit utilization ratio.
- Consider Credit Building Options
It can sometimes take years to repair or build your credit. This is not a quick fix so don’t pile up any unrealistic expectations to fix this issue. The time required to fix your credit history varies from person to person. With the best case it takes at least 30 days as most of creditors report payments once a month. Hard credit inquiries go off after two years, on the other side overdue payments may take more years to get off from your report.
- Keep Working
One can improve the chances for a personal loan even in case of past bankruptcy just by a proper management of credit report.
- Try to maintain a lower Debt/Income ratio
- If possible try pay your bills in full but always on time
- Avoid the use to credit cards to least possible extent
- Forget the mistakes of past, but focus on future to build a better tomorrow
After adopting all the above steps when you feel that you have done enough to build your credit go ahead to apply for a personal loan. Start by checking your rate if the result is not as you was expecting, then repeat the whole process as we discuss above from top to bottom. Believe me or not it’s a little hard task to build credit.