They rejected you! If you were denied a consumer loan, we teach you how to recover
Applying for a loan is easy, but it is not 100% sure that the bank or financial institution you turn to says yes. A large part will have to do with your profile: your income, your debts, your financial behavior, among other points, and also with the amount you are requesting as well as the documents you have presented and how you supported it.
If, after all, the answer ends up being no, it is normal to feel discouraged and want to send everything down. Overall, if they already told you no, does it make sense to keep trying with the same bank or with someone else? It is also valid to get angry, since the denial of credit means that you will not be able to meet the goal you were looking for, whether it be paying for a trip, taking a vacation, paying for your studies, among others.
But rather than taking this as an excuse to throw in the towel, it’s better to look at it as a new motivation to correct certain aspects of your financial life and try again. With a few changes, the next time you request it, you will definitely do better.
So what should you do Get out a pencil and paper and take note of these tips!
1. Ask for a reason
If you were denied the credit, you can consult the advisor who attended you what were the reasons for the refusal. This will give you lights to see what small changes you can implement. Some entities even send you an email or a document explaining the reason for the rejection. Normally, it is common for credits to be denied when they exceed the person’s ability to pay or when it is shown that they have the necessary income to pay it.
2. Reduce your debts
If you have several active credit cards and one or more credits to pay, you will not be well regarded by financial institutions, as your risk exposure is very high. Even if your income is very high, having so many debts shows that you are not managing your cash well.
So, something you can do is eliminate some cards or focus on canceling the credit that you have active. Once your risk exposure is reduced, you will have a better chance of being approved.
3. Check your credit report
You can request this report from a credit center. The idea is that you check the status of your credit history, to see if you are qualified as a risky customer or not. This is a very important point when applying for financing. This will also serve to check if all the payments made were recorded correctly or if there is any debt that you do not recognize and that may harm you.
4. Build your history
If you have never been related to credit, have never had a credit card or applied for credit before, it is normal that there is uncertainty on the part of financial institutions, since they do not know if you are a good or bad payer and you continue to represent a risk. What can you do? One of the easiest steps is to purchase a credit card. It does not mean that you will get into debt, rather, the objective is to use it to make certain purchases that you would make in cash and pay it on time so that you begin to demonstrate your good financial habits.
5. Increase your income
Something that also works is looking for alternative sources of income, so that you have a greater ability to pay.
6. Check the amount you are requesting
If you are asking for more money than you can pay, it is one of the reasons why they could have denied you the loan. So, ideally, you analyze if that amount is what you really need and according to that, do your calculations to see if you can reduce the amount. Additionally, it will be very useful for you to know what your payment capacity is. How do you know? Add up all your income and then subtract all the payments you need to make. The remaining money, which is “free” is what represents what you could spend to pay off the credit monthly.
Finally, try to have all the documents in order so that there are no problems when presenting them and whoever reviews your application finds everything you need, without exceptions. The clearer the information, the faster it can be managed.