If there’s one thing that is certain in life, it’s the fact that we’re going to face some financial hurdles from time to time. When the time comes that financial assistance is badly needed, it could be very frustrating when you cannot be granted a loan when you need it the most. Here are the top reasons why you could be rejected on your loan application.
Change in Employment
One of the things lenders ask for whenever you apply for a loan is the nature of your job or business. Basically, they prefer individuals with a proven track of a stable job, preferably someone who has been a part of the same company for quite some time. While a few job changes for the sake of getting a higher salary or position may not hurt at all, lenders may see it as a red flag if you change jobs too frequently.
Too Many Loan or Credit Applications
Having too many loan applications that aren’t spaced out may be seen negatively, because lenders may doubt your ability to pay your existing debts. Furthermore, too many applications at the same time could bring a huge damage to your credit rating in general.
Having Too Little Credit
On the contrary, having too little credit is almost as bad as having bad credit. Without enough credit history, lenders will have a hard time predicting how you are likely to behave on your future repayments, thus they will see you as a high-risk borrower. If you have an existing credit card, perhaps it would be best to keep it a while longer.
Whether it’s on your rent, utilities, or credit card payments, being constantly late can almost certainly trash your application. Lenders almost always prefer those with stellar credit rating, because they want to make sure that you will be able to pay them back.
Any misinformation in your application, whether intentional or non-intentional, can cause immediate rejection. Furthermore, you may face charges or become blacklisted. Make sure you check your credit report regularly for errors.
Not Enough Supporting Documents
While all providers would pull out a copy of your credit report to check your payment behaviour, many of them will still require supporting documents, such as bank statements, tax certificates, assets, certification from your employer, etc. This gives them the leverage to explore other means to collect money from you should you default.