Budgeting Ideas Gallery

Why and When Your Loan Application Can Be Denied

There are a lot of different reasons then you can be denied credit. If you apply for a loan for a house, car, boat or credit card you may be denied the loan because of a host of different reasons. Usually, the company will tell you exactly why you were denied for the loan. Some reasons might include:

1) You have just filed for bankruptcy or have recently. Companies will most likely not give you a loan because you have admitted that you cannot afford the house you were living in. You could not make the payments and therefore they are skeptical about giving you a loan you might not be able to pay back.

2) You have too many credit cards. You should only have about 3 large credit cards. Credit cards from stores actually decrease your credit. (Ex: Jcpenneys) They give credit cards to everybody that walks in the door and this looks like you are desperate for any type of credit card you can get. You should pay off these cards and shred them. Do not close the accounts because that makes you look bad. If you rip up the card the card will become inactive in a few years and this will increase your credit.

3) You have credit cards with high balances. If your credit cards are more than 30% used up than this hurts your credit. You need to pay off the balances below the 30% mark and then keep them below this balance. The more you can pay off towards the cards, the better. I would suggest paying off high interest rates cards first and then shred them also. You can always apply for cards with better interest rates down the road.

4) You haven’t had a job long enough. Some places need you to have a steady job for at least 2 years. The longer you are at that job the better. They want you to be making a steady amount of income each month and be able to pay off your bills.

5) Your other bills are too high to be able to afford to get a new car, house or boat. You need to pay off some of your debt before you can get other things. They take a look at how much you make and see what all your other payments are. I would suggest getting rid of some bills that you don’t need such as extra cell phones, storage units, and other things.

6) Your credit is bad or you have too many inquiries in a one year period. The number of inquiries show up on your credit report. Whenever somebody looks at your credit report it will show up as an inquiry. When you apply for a credit card, move or try to get into a house this will show up as inquiries also.