The following post about personal loans sent from a friend of the blog.
A personal loan can make a massive difference in your life. Whether you need it to cover an emergency payment, desperately need a little help to make ends meet or need capital to invest in your small business, accessing funds is a process that most people will have to go through at some point.
Although there is no reason to fear the process itself, the uncertainty of applying for a personal loan can be traumatic. Furthermore, if you should be rejected, you may feel hopeless. Understanding common reasons why personal loan applications are rejected may help you to overcome that uncertainty and enhance your chances of approval.
You have excessive debt
It may seem like a contradiction, but you will have to have some debt in order to qualify for a personal loan. The bank needs to see that you are able to pay back debt regularly – you need to prove that you’re “good for” the loan. If you have massive debt, then your application may be rejected on the grounds that the bank isn’t convinced you will be able to make your repayments with the added interest.
If you have a problem with debt, and the chance to plan your loan in advance, try and reduce your debt – or at least manage it consistently – to convince the bank you can handle the payment plan.
You have a low credit score
If you don’t have any “positive” debt or significant assets to your name, then you might not be approved for a personal loan. Once again, the banks need some kind of proof that they can trust you to make your payments. Assets are also a guarantee should you default on your payments as they can be repossessed. If your credit is bad consider a lender that gives out bad credit loans.
You do not meet the criteria
Although every institution is different, there are certain basic selection criteria’s that you need to meet in order to be approved for a personal loan. Employment, a fixed address, a bank account, and a decent credit rating are all requirements. If you are unsure then be sure to ask the loan office what they need.
You’ve filled in the application incorrectly
There are strict regulations around your personal information when it comes time to apply for a loan, especially if you are filling in forms and supplying documentation manually. Small details or mistakes can mean you are denied, so always be sure you triple check your details.
You have been blacklisted
Failure to honor your repayment commitments may mean you are placed on a list that prevents you from being approved for further loans. This is called being blacklisted. In some cases, this kind of label can stick with you for quite some time, so if you overcome the debt issues be sure to get documents confirming your viable status.
Remember that there are places you can go for help if you need help improving your financial status. Talk to a financial adviser or do some research online, and keep these tips in mind the next time you apply for a personal loan. As devastating as it may be, rejection is an indication that you may need some kind of formal help.