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What Exactly to Do After Your Loan Gets Rejected

Key aspects you need to reflect on and what to do after a loan rejection. Learn more at SpotMe.

Worry not. Loan rejection is not the end of the world.

Did you ever apply for credit and get rejected? How did it make you feel? Did it leave you shocked, disappointed and panicked?

There’s no need to panic, though. Credit providers and lenders reject credit applications all the time, with a lot of analysis and consideration. So, after the shock and disappointment subside, let’s reflect and read on to see why your loan application got rejected, what next steps you should take, and what you can do to make things better.

Reasons behind a loan rejection
As regulated by the law, credit providers and lenders must lend money responsibly. This is to avoid arrears and defaults – a situation when a debt repayment is overdue for 60 days or more – by people who can’t afford to repay their debts. That’s why credit providers conduct a series of screening process, checking your whole credit history and report carefully to determine whether you will be able to repay this debt you’re applying for.

Your loan application might get rejected for some reasons. The first one is that your credit report isn’t in your favor – maybe you missed several repayments for over 14 days in the past, or worse, you might have had defaults before.

Second, the credit providers might decide that you don’t have enough money saved in bank to be able to repay the amount of loan you’re applying. Hence, loan rejection. Another possible reason why your loan got rejected is because you already have some debts, and your income doesn’t seem enough for your to afford another loan. In other words, credit providers may reject your loan application if they think you will struggle to repay the debt.

What to do after a loan rejection
It is not advised to apply for another credit if you just got rejected, for it will damage your credit report to apply for several loans in a short period of time. So, here’s what you should do instead of trying your luck in different credit providers:
– Check your credit report
You can request for a free copy of your credit report once in a year. Learn more about credit report here.
– Manage your existing debts
See if you can manage all the debts you currently have, whether by consolidating them, repaying them using snowball or avalanche methods, or others.
– Budgeting
Create a budget so you can pay off your existing debts before applying for a new one.
– Apply with a guarantor
Consider this the last option. It is tricky to apply for a loan with a guarantor, especially because a guarantor is usually a family or close friend, and if anything goes wrong, they will be affected too.

Once you’ve done everything you can to fix your credit history, then you can reapply. This time you can try applying for a short-term loan with easy steps, low interests and flexible repayment plan with SpotMe.

Getting a loan rejection is not the end of the world. If nothing else, it might be a blessing in disguise. You get a chance to think over, whether or not you really need this loan.

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