Reasons Why Loans are Refused

By: J Tillotson

Getting a loan in the UK Is proving harder and harder. Even applicants with good credit scores are finding banks less willing to lend them money, and interest rates are rising, seemingly to put potential borrowers off. The numbers of loans refused is at an all-time high, because lenders are becoming more choosy about who they accept. Here are some of the reasons why your application may have been refused.

It goes without saying that the most common reason is a poor credit score. This is the single biggest factor a lender will use to decide how much of a financial risk you are. If your credit rating is in dire straits, then the following points probably won't be able to help you. You will need to do some serious damage control first.

But, if you've kept your credit reasonably stable, and you've checked your file to make sure there's nothing on there that may be putting lenders off and you're still getting refused for loans, check through this list and make sure you're not forgetting anything.

Incomplete Application - Even if some of the fields on the application don't apply to you, putting an N/A will at least show you've read the form fully and understood it. Many loans are refused simply because the applicant hasn't bothered to fill everything in.

Illegibility - Most loan applications are fortunately made online, however if you are required to fill one out by hand, write as neatly as possible. If you can't read your own writing, don't expect a lender to bother trying.

Inaccuracy - Being dishonest about any part of your application, or deliberately omitting details that you know should be disclosed could cause embarrassment and a refusal if you're later asked to provide evidence.

Financial Disclosure - A lender will need to know your current financial status. This means full incomings and outgoings, and details of any current ongoing debts. Don't just guess at your current debt level. Obtaining your credit file prior to applying for loans can assist you with giving full, comprehensive and accurate details.

Purpose of Loan - Believe it or not, this can make the difference between an application being accepted or turned down flat. Leaving it blank indicates a less than honourable reason for the loan, whereas weddings, holidays, a new car etc can all be seen as legitimate purposes and therefore look better in the eyes of a lender.

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