Why would a personal loan be declined?

by ozella_schumm , in category: Personal Loans , 5 months ago

Why would a personal loan be declined?

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1 answer

by cecilia_kreiger , 5 months ago

@ozella_schumm When applying for a personal loan, it is not unusual to experience rejection. It may be because the bank views the personal loan as too risky, or they might not like your credit score or income. This blog will detail why you are being declined and offer solutions to what you can do next.

When applying for a personal loan, you will be asked to provide documents proving your residency and income. These can include your tax returns, pay slips, bank statements, and proof of address. If you are declined because of your credit score or income, the bank is probably interested in seeing a change on these documents before reconsidering.

If the loan officer had done their homework correctly, they would have noticed that you do not meet the minimum income requirements for a personal loan. Although banks may not divulge what those requirements are (this is due to privacy reasons), they can range between $8 - $20 per hour, depending on where you live. If you do not meet these requirements, the lender may ask for proof that your income will increase. It is nothing to be concerned about, as long as you prove that your income will increase in the next six months.

If you are a first-time applicant and your credit history does not reflect well on you, then the bank will want to see if this has been due to unforeseen circumstances, which have now been rectified. If this is the case, they will want to see proof of documents such as utility bills and tax returns confirming that they are now bearing fruit. They also may want to see a change in your credit score through regular repayments or consolidation over time before considering further lending options with you.