It’s one of the things most dreaded by those of us who might consider applying for cash loans from time to time; the possibility that we might not be accepted for a loan at all.
If you do get rejected for a loan, this will be due to your application not matching the criteria set by the lender. So, it doesn’t necessarily mean that you will be unsuccessful if you seek a loan from an alternative lender.
Still, it helps to know some of the specific reasons why people get turned down for a short-term loan, so that you can put together a loan application that has a strong chance of being accepted at the first attempt. Below, we’ve put the spotlight on why you might be rejected as a prospective borrower.
Sometimes, people can be turned down for cash loans for relatively “unglamorous” reasons that have little or nothing to do with their ability to repay the money.
We’re referring to such things as the applicant not being at least 18 years of age, not being a resident of the UK, and/or not being in receipt of a regular income.
These things tend to be outlined as criteria by lenders for would-be borrowers to check before they submit a loan application. The exact eligibility requirements can vary from one lender to the next, so you should check the situation with the particular lender you have chosen.
Your credit score – also known as a “credit rating” – will set out to potential lenders how much of a “safe bet” you are when it comes to paying back money that you owe. Every UK adult has a credit score, and when you apply for a loan, the lender will be able to check your credit file, with this informing their decision-making on whether to approve your application.
Unfortunately, if you have a poor credit score and your credit file paints a picture of someone who struggles with the management of money they have borrowed – perhaps manifesting in such things as missed payments or default notices – there could be a stronger chance of your application being declined.
So, you know what to do in order to avoid this situation: make sure you are very careful and responsible in the management of your money. This will need to include ensuring you repay whatever credit you might already owe, at the times you agreed with your lender.
As well as the credit check, when lenders are considering applications for cash loans, they also usually undertake an affordability assessment. This process is designed to help them determine how likely it is that the applicant will be able to complete their repayments on the loan.
If you are such an applicant and you already have a few loans that you are in the process of paying off, the lender to which you have applied for a further loan might be deterred by this. They might come to the conclusion that you have enough financial commitments already, and that it therefore wouldn’t be financially responsible of them to add further to this burden.
This is just one more reason why trying to have several loans ongoing at the same time – especially if you are in a situation of attempting to use loans to pay off other loans – can be an extremely bad idea.
Remember, taking on a loan is a significant financial commitment. It's important to think carefully before securing other debts against your home, as your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
As a credit broker here at CashCompare, we work with multiple lenders that specialise in short-term cash loans, which might help to ensure you are not rejected when you next seek to borrow money. To learn more about what your options could be, with no obligation to commit to a particular loan deal, why not complete and submit our straightforward quote request form today?
"Warning: Late repayment can cause you serious money problems. Always consider if borrowing is the right option for you and ensure you can repay your loan." For help, go to moneyhelper.org.uk.