The Big Question: What to Do If a Lender of Cash Loans Online Rejects Your Application
The term ‘guaranteed personal loan’ is usually misunderstood. The loan for which a request is made is guaranteed only after verifying the submitted details. These details should fulfill the criteria that a lender pre-defines for approving a loan application.
So, an instant loan or cash advance now is only possible after submitting and verifying an application. Without filling out an application form, there is nothing as guaranteed loan. Thus, chances of loan rejection are always there.
In case your application for cash loans online is denied, it’s obvious to think what to do next. This is the time when there are two options in front of you: Forget what happened and apply somewhere else or analyze why the loan application was denied and avoid repeating the same mistake while applying next time.
Well, a smart borrower will always choose the second way. Instead of simply waiting for the right time apply again, it’s wise to find out how to prevent a denial again. It’s important to comprehend what happened, as it is likely to continue to occur until you do not take an action.
A denial is perhaps a sign of warning that something was wrong. This is applicable to any kind of online or offline loan. So, here are a few steps to follow to find out what went wrong.
Find Out the Cause of the Problem Preventing The Approval of Cash Loans Online
The first step is to know what was the reason for declining the loan application. The good news is that lenders are usually willing to share that reason. There are usually two major reasons for denial, which are insufficient income and credit issues.
There are many lenders of cash loans online who believe in lending to those having a good credit score. This criterion reveals yours borrowing history to them, which tells them whether you will be able to repay or not. At times, defaulting in the past might be due to some rare challenges or you may not have borrowed much. Regardless of these situations, it becomes tough to borrow without a convincing credit score.
In case bad credit is the reason for denial, the lender is required to give an adverse action notice. This notice states that the credit history was against you, which was enough to take the decision of denial. The history may include several inquiries or defaulting more than thrice.
The second reason is of insufficient income. This is the major reason for no credit check cash loans online. The lenders who do not check your credit score or history often considers your stable source of income as a major factor for approval.
This is because it is perhaps the only reliable criterion that tells the online lender whether you will be able to repay or not. It also tells them whether you will be able to pay the monthly installments or not.
Many online lenders consider the debt to income ratio to find out how well you can tackle payments after loan approval. To calculate this ratio, they ask how much you spend each month from your income to repay existing debts. Usually, this ratio should not exceed 35% if you wish to get your cash loans approved.
Eliminate the Problem That Causes Your Cash Loans Online Application to be Denied
Once you know what went wrong, it’s now time to find out a solution to fix it. The solution can be either for a short or long term. This is because not all problems are such that they go away instantly.
If credit issues are there, find them out. For example, there might be some errors in the credit report, which you can get fix quickly. Why you should suffer just because of a single typing error? You have full right to rectify such errors.
If the credit score is low, try to increase it by paying off the existing debts and bills on time. Paying off debts is also likely to increase your debt-to-income ratio although it may take time.
If the income source or insufficient income is an issue, try to find a stable job and then re-apply. Look for alternative sources of income, which you can then use to increase the chances of approval. One more alternative is that you can offer a collateral to a lender of cash loans online or offline, especially if you need a business or personal loan.
A collateral may put rejection away, as it shows the lender that you are securing the loan. However, choose the collateral sensibly. For example, it is worth making your home as a collateral for taking a loan for a luxury car.
In case your credit score is less as well as the income is insufficient, go for a cosigner. A cosigner is a person with a good credit score as well as income who convinces the lender to repay the loan on time. Yes! Even a cosigner will be responsible for repayment. Otherwise, even his or her credit score goes down significantly.