The 5 Most Common Reasons Lenders Turn You Down
In a sponsored article Satsuma Loans says there are many reasons why a bank or lender might reject your application for a loan: Here are some of the most common:
1) Previous financial problems
If you have acquired a loan in the past and have been unable to pay it back on time or failed to make regular repayments on time then this could seriously harm your chances of obtaining a loan. If you are going to borrow money then make sure you can pay it back as any missed repayments remain on your credit record for three years – thus affecting your future ability to receive loan payments.
2) You are not on the electoral register
Companies use the electoral register to confirm that customers are really who they say they are, if you are not registered make sure that you do it before applying for a loan. If you are registered then make sure your details are up to date.
3) You have no history of borrowing
Though this removes the likelihood of a bad credit score dragging you down, a zero credit score can be bad too. This is because lenders cannot be sure that you will pay them back regularly or on time as a credit check is not going to prove or disprove it.
In this instance, you need to look for loans and credit agreements designed for first time borrowers to avoid racking up a large number of rejected applications on your record. Some firms such as Satsuma Loans are almost guaranteed to offer loans of up to £300 for first time borrowers – as long as you can pay it back on time then it is well worth considering. Always remember to check that the repayments are affordable for your situation and never accept a loan of higher value than you actually need – no matter how tempting the figure is!
4) You’re self-employed
Many self-employed people will know that at times your income can be turbulent and this can be held against you when applying for a loan. Although there are perks to being self-employed it is important to recognise how it might affect your chances of obtaining a loan and to make sure your business affairs are in a good state before considering any type of financial borrowing.
5) You have too much debt
For obvious reasons, high value debts are another turn-off to lenders. To improve your chances of being successful in your loan applications you should close any unused credit card accounts and do everything in your power to reduce and clear your debts. This could mean looking at setting up a debt management plan that consolidates all of your debts into one repayment amount that is easier to manage.