Having your loan denied can be a gut-wrenching feeling.
You’ve worked hard to get to the point where you feel comfortable taking a loan. You have dreams and goals that will only be achievable if you had a little extra cash on hand.
And when your loan application is denied, it feels like those dreams will never become reality.
Don’t give up on your goals just yet. Loan denial isn’t the end of the road, but rather a detour sign sending you to the next path.
Consider the following things you can do to get the money you need without having to save up for months.
1. Consider Why Your Loan was Denied
Your loan may have been denied for several reasons: poor credit score, no credit history, missing information on the application, requested too much money, or high debt-to-income ratio, among others.
It’s important to pinpoint exactly why your loan was denied so you can tackle that specific issue.
2. Check Your Credit Report
When lenders are weighing whether or not to loan you money, your credit report will be part of their decision.
You can request a credit report at no cost or consequence to see if your profile is accurate and up-to-date. Any errors you find should be reported to the credit bureaus and followed up on until the issues are resolved.
If you think you have no credit, you should still look at your report to make sure someone hasn’t opened credit in your name. This is a common occurrence (also referred to as identity theft) and can prevent you from getting the loan you need.
3. Seek Out a Co-Signor
A friend or family member who knows your ability to repay the loan may be willing to co-sign for you.
Be careful, though. If for some reason you are unable to repay the loan, your co-signor will bear the debt. It could ruin your relationship with your co-signor or make you appear unreliable or untrustworthy.
This should only be an option if you feel absolutely confident in your ability to pay the loan.
4. Opt for a Bad Credit Loan
If your credit score is keeping you away from your loan, consider a loan designed specifically for people with bad credit.
Bad credit loans exist to help people with bad credit get the funds they need. Interest rates may be a little higher than traditional loans, so make sure you understand the total cost of your loan prior to applying.
5. Ask for Less Money
Lenders may be willing to give you money, but not in the amount you were requesting. But if you get a less expensive car, a smaller house, or less money for a personal loan, you might get approved.
Reassess your financial needs to see if you could get by with less money, then reapply for your loan.
If you can’t get by with less money, consider getting two smaller loans from different lenders that will equal the larger amount you need.
Loan Denied? It’s Not the End!
Don’t let having your loan denied stand between you and your goals. You might not get the answer you hoped for, but there are other options worth exploring. All you need to do is be smart enough to try again.
For more game-changing money advice, visit our Finances section.