Why Your Personal Loan May Have Been Denied
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
8 Common Reasons for Personal Loan Rejection
You Didn’t Meet the Basic Requirements
Poor Credit History
High Debt-to-Income Ratio
Loan Purpose Was Off Limits
Tried to Borrow too Much
Tips for Increasing Your Chances of Approval
Improving Your Debt-to-Income Ratio
Stabilizing Your Employment Status and Income
Strengthening Your Credit
Preparing for the Next Loan Application
Alternatives to Personal Loans
Credit cards. You could use a credit card to cover your expenses — if you have a card or you can qualify to get one. They are easy and convenient to use. Just keep in mind that credit cards have high interest rates. Unless you can pay off the full balance by the end of the billing period, you could end up paying a large amount in interest over time. Car title loan. This is a type of short-term loan that uses your car as collateral. To qualify, you will need the car title to prove that you own the vehicle. But be aware that these loans typically have high interest rates and fees. Plus, you could lose your car if you can’t repay the loan. Family loan. Taking out a family loan involves borrowing money from a relative and repaying it over a specified period of time. To avoid potential conflicts, it’s often wise to put the loan terms in writing. And make sure you can repay the loan on time in order to avoid family strife.
3 Personal Loan Tips
Personal loan interest rates vary from lender to lender, but generally depend on your credit score. With one online application, Lantern by SoFi makes it easy to find and compare the personal loan interest rates that you qualify for. If the interest rates you’re being offered seem too high, try lowering the loan amount. Generally, the larger the loan, the greater the risk for lenders, who likely charge a higher interest rate for the increased risk level. Watch out for lenders who advertise “guaranteed” loans. Legitimate lenders will want to know your creditworthiness before offering a loan.
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