There is a common misconception that the only people who are denied loan applications are people with bad credit. The truth is you can still be denied a loan even if you have a good credit score. Many different factors play a role in whether lenders accept your application. Whether you need to fix your credit score or if you have good credit, here are four reasons why you might have received a denied loan application.
Too Much Debt Burden
Lenders must analyze your financial history to determine how likely you are to repay your loan. If you have a lot of existing debt across multiple credit accounts, then the lender might think you have too much debt burden to take on another loan. The goal is to lower your debt-to-income ratio as much as possible and you’ll increase the chances of having your loan application accepted.
You’ve Made Several Hard Inquiries Recently
When you apply for a mortgage loan, student loan, personal loan, or even a credit card, a hard inquiry will appear on your credit report. While these might not lead you to seek credit score help, lenders could see multiple hard inquiries as desperation. Be careful about making multiple hard inquiries in a short amount of time.
Your Credit History Is Not Extensive Enough
Lenders love seeing established credit histories with no missed payments. Many times the threshold lenders look for is a payment history of about seven years. So if you’re just getting on your feet in the working world and paying bills, patience might be the best strategy. Of course, if you need to fix your credit score that’s too low, then you can work to do that simultaneously.
Your Credit Score Needs To Be Higher
The low end of a good credit score is 690. So the higher your credit score is, generally the better the chances are of getting a loan application approved. There are many different strategies to improve your score based on your financial situation. If you need credit score help, reach out to an expert to ensure you’re on the right track.
Core Credit Solutions has more than 25 years of experience with credit repair in Los Angeles. Our team can help you develop credit-building strategies to help you improve your credit score for the rest of your life. If you’ve had a loan application denied recently, contact us to see how we can help ensure it doesn’t happen again.