Having a loan application rejected is undoubtedly frustrating, but it’s not the end of the world. There are lots of loan providers out there, and there are some simple steps you can take to improve your chances of future approval. Here we discuss what you should do if your loan application is rejected and how Transave can potentially help you access the credit that you need.
Is a loan the right product for you?
A loan is one of several types of credit that you can apply for, but it might not necessarily be the right option for you. Credit cards, bank overdrafts and Buy Now Pay Later agreements are just some of the alternatives open to you. So, if you’ve had several loan applications rejected, it’s a good idea to consider whether an alternative could be a good option for you before proceeding with another loan application.
Check for errors on your credit file
If you think that your applications have been unfairly rejected, it could be due to an error on your credit file. The three major credit bureaus in the UK – Experian, Equifax, and TransUnion all keep details about your credit history that they then supply to lenders upon request. Even small mistakes can be costly, so it’s really important to check that your credit file is accurate and error-free. You can easily apply for a copy of your statutory credit report online. If you notice any errors, be sure to raise them with the credit agency as soon as possible.
Consider your eligibility
All lenders have specific eligibility criteria for borrowers. Therefore, it’s crucial that you read through the application requirements before submitting an application. If you don’t meet the eligibility requirements, your application will be rejected – it’s as simple as that. So make sure you consider your eligibility before applying for a loan and only apply to lenders that will consider your application.
Improve your credit score
Most traditional lenders reject credit applications because of bad credit history. Missing or making late payments in the past negatively affects your credit score and makes it harder to apply for credit. Fortunately, there are certain things you can do to improve your credit score before reapplying for a loan.
Most importantly, make sure you pay all of your bills on time, as well as any monthly credit repayments. Next, check that you’re registered to vote and your credit file is error-free (as explained above). It can take several months for your score to improve, but these small steps will help to boost your score and your chances of approval.
Look for an Open Banking lender
Since 2018 Open Banking has changed the way that borrowers can access credit and other financial services. At Transave, we use Open Banking to consider Instant loan applications based on a borrower’s current financial circumstances.
This means when we assess your full application, we don’t rely solely on your credit score and are just as concerned about your incomings and outgoings and whether or not you can afford the repayments on the proposed loan. Through the use of APIs, Open Banking has made it possible for financial institutions to safely and securely share customer information, improving the quality of products and services available.
Ultimately, if you have had multiple credit applications rejected, you need to take some simple steps before submitting a new application. Remember, multiple applications in a short space of time will affect your credit score, so don’t fall into the trap of continually applying for loans without taking on board the tips introduced above.