It can be disheartening for a bank to deny you a loan, especially if you need one for an emergency like a home repair, hospital bill, or car repair. However, that doesn't mean no one will lend you the money you need. There are short-term and long-term strategies to repair your credit and help you in this situation.
You must do some basic things if a bank refuses your loan application. Banks are more stringent than ever before about whom they lend money. There are five primary reasons why a bank won't lend you money:
Often, a lender will list a general reason for the denial, such as too many missed or late payments. If no reason is given, you have 60 days to ask the lender for a specific reason under the Equal Credit Opportunity Act. This will guide you as to what needs to be repaired.
You can get a free report once a year from the three major credit bureaus: Equifax, TransUnion, and Experian. In addition, those denied a loan are also entitled to a free credit report from the credit bureau used by the bank. So, the denial letter should have that information.
The first thing anyone should do with their credit report is to check it for errors. They do happen. A previous loan could be paid off but still show up as abandoned. Next, please write a letter to each of the credit bureaus requesting they fix errors and provide them with proof of your status. That may mean calling the original lender to get a "paid in full" letter if you don't have one available.
One available option is to prequalify with other lenders. Lenders are different, and some cater to those with less-than-perfect credit. Many will do a soft credit check, so it won't affect your credit score.
You can try a credit union; these not-for-profit institutions may be more willing to look at your entire financial picture and offer a loan. Another option is to back your loan request with money from your savings. A bank or credit union sometimes offers a loan that matches your saved money. Repaying such a loan will improve your credit score and build your banking relationship.
A third option is to request a lower loan amount. Again, this may work if the debt-to-ratio is too high. But, again, seeking a smaller loan may get you approved.
Whatever you do, you will need to plan to improve your credit. There are two sure ways to do that. The first is to increase your income to improve your debt-to-income ratio and pay down your debt.
The second is to pay down the debt. Most experts recommend beginning with the smallest debt and gradually increasing payments. Be sure to get paid in complete statements for each debt paid off.
Some banks or credit unions will offer a consolidated loan to help you manage your debt. An option is to negotiate debt settlements for less than the total amount, get a consolidated loan, and pay off the settlements.
That will save you money and improve your credit score. Furthermore, timely repayment of the consolidated loan to the bank or credit union will restore your credit and strengthen the lender relationship.
Those who want to rebuild credit can get a secured credit card. This is an option for those coming out of bankruptcy, a divorce, or another legal proceeding. It is also an option for those with no established credit.
With a secured credit card, you put money on the card and then use it like a credit card. It reports your account to the credit bureaus as a typical credit card, so it helps build your credit.
A secured credit card is different from a prepaid card. A prepaid card acts like a debit card and doesn't report your activity to the credit union bureaus as a secured credit card reports it.
Plus, many payment centers and businesses won't accept prepaid cards for automatic payments when it comes to things like television subscriptions, utility bills, hotels, and rental companies. However, they will accept a secured credit card if it features a major brand like Visa or Mastercard.
Alternative lending companies like Simple Fast Loans are accustomed to dealing with situations where someone needs money now but has been turned down by a bank.
Simple Fast Loans offers installment loans for borrowers in need.
Some of the great things about Simple Fast Loans' installment loans is that the money is available to you as soon as the same day, or even instantly, upon approval, and the application process is quickly done online in the privacy of your home.
That makes the process more comfortable and less stressful than working with traditional lenders.
Each funding option has unique characteristics, so it's good to consider them to decide what's best for your situation.
Installment loans are loans you pay out monthly over a set time. At Simple Fast Loans, loan amounts for installment loans range from $200 to $3,000. The amount depends on your income and ability to repay, along with state laws for each state regarding the maximum you can borrow.
The application process for Simple Fast Loans is an easy online form. Decisions are made immediately once you complete the application.
Two things are required to apply us: a valid driver's license, government-issued photo identification, and an active checking account. The money for the loan will be deposited into your checking account.
Loans signed before 2 p.m. EST on a typical bank day are usually deposited the same day. Loans signed later in the afternoon are deposited into your bank account by the end of the next banking day. Another option is to get instant funding with a bank debit card with the MasterCard or Visa logo.
Getting denied a loan by a bank doesn't mean you have no options. Applying with Simple Fast Loans is stress-free. Those with questions can also use the online chat, send an email, or call. Simple Fast Loans will be happy to answer your questions.