If you are being rejected for loans and credit cards, again and again, we understand it can be difficult to know where you are going wrong. Many credit cards are now marketed as being for those with poor credit scores and offer same day approval and spending. However, where this has not been your experience, we can help.
Many people think that being accepted for a loan or credit card is a matter of applying again and again until you find the right product. After all, they are specifically designed to help out those who need access to additional money. However, even where you apply for a loan or credit card with a lender that has a high approval rate or is designed for those with adverse credit, you can be rejected.
We understand that this can be frustrating, and where you need money quickly, you don’t want to waste time applying for loans and credit cards only to come up empty-handed. In this post, we look at the common reasons why you might be rejected for loans or credit cards to help you build a strategy for accessing the vital funds you need.
What Makes up Your Borrower Profile?
To fully understand why you might be rejected for a loan or credit card, it is important to consider the factors that make up your borrower profile. It can be upsetting to be rejected for a financial product, particularly when you hear so much about how they are quick and easy to access, or a friend or family member has recommended you the product too. Where you are rejected for a credit card or loan, rather than continue to apply for products from different lenders, you should seek to find out why that lender rejected you. Here are the key factors that affect whether you will be accepted for a payday loan.
Affordability Criteria
Under various government regulations, all lenders must carry out affordability checks before approving any loan or credit application. To determine whether the credit is affordable for you, the lender will assess your income vs your expenses. To be affordable, you must be left with enough money to cover your repayments.
If you have been rejected for a loan or credit card based on affordability, you may wish to look at decreasing your outgoings and increasing your income. You should never lie about your income or expenses to obtain a loan or credit card. Instead, try to find ways of reducing what you spend, even by a little and increasing what you earn. Perhaps you could get a part-time job or cut back on unnecessary expenses.
Your Credit History
Many credit brokers will not deny you a loan because of your credit history, and in fact, some specialise in taking on customers with adverse credit. However, some lenders will take account of your credit history when deciding whether to lend to you or not. However, lenders may not make this clear to you when you make your loan application. Generally, borrowers deemed to be ‘high-risk’ will have a poor credit score, among other factors.
Where this applies to you, you should take steps to improve your credit score which can improve your chances of securing a loan. Firstly, you should check if there are any errors on your credit file. Errors may have damaged your credit score unfairly. Although this may be challenging, you should also try to pay your bills on time. This can improve your credit score gradually over time. Again, beware of applying for many products in a short space of time, as this can negatively affect your credit score.
Applying for Too Many Loans
If you apply for too many loans, credit cards or store cards, this can be off-putting for lenders. Lenders will avoid lending to people that apply for loan after loan. Instead of submitting a loan or credit application every time you are rejected, take your time to research and find lenders where you meet the criteria for lending.
There is no point in applying for loans or credit cards where you do not meet the eligibility criteria even if they advertise loans as having no credit checks – your application will be rejected, and this could damage your chances of being accepted by other lenders. In addition to over applying, being accepted for loans or other credit products again and again can increase your risk profile. It would be best to prioritise improving your financial situation to only apply for a loan for a specific purpose and manage your spending, so you do not need to rely on financial products. When you do this, you will have a better chance of success when you need it most.
In summary, both credit card companies and lenders are more cautious than ever before about lending. However, this should be regarded as a good thing. The FCA designed the regulations to keep people out of inescapable cycles of debt and to encourage responsible lending. The recent cap on money to be made from lending has dissuaded irresponsible lenders from making their money from high-risk people who would never be able to afford repayments and, as a result, be landed with late fees and penalties. This can be harmful to your long-term financial stability. It would help if you regarded the stringent criteria for lending as a good thing. It is, after all, there to protect you.
Ready to Find the Financial Product That’s Right for Your Circumstances? Try Cobra Payday Loans Today.
Here at Cobra Payday Loans, we are specialists in helping people find short-term solutions to their financial problems. Our business is different from our competitors because we work closely with a variety of FCA approved lenders. So you can rest assured of responsible lending. Cobra Payday Loans is a leader in terms of loan matching, and we can help source the loan you need quickly with a single application form.