June 21st, 2018 | Updated on July 21st, 2018
We live in the digital age, and as a general rule the advent of technology has simplified everyday processes while making it easier for citizens to access a diverse range of coveted financial products.
This is embodied by the rise of online loans, which are effectively described as lines of credit that can be applied for and completed through the Internet. These not only feature innovative, interactive budget tools and repayment calculators, but they also allow for quick and convenient completions in most instances.
No matter how you apply for credit or a personal loan, there remains a chance that this will be rejected. There are numerous reasons why this may be the case, and understanding these is crucial to your chances of achieving success and minimising the amount of applications that you make over time.
In this post, we’ll address the main reasons why your application may fail and look at how to counter these problems.
1. Address formatting issues and your absence from the electoral roll
When you apply online and enter your personal details, accuracy and consistency is key. After all, lenders rely on this data when deciding whether or not to extend an unsecured loan offer, so any issues or discrepancies can be extremely debilitating.
To avoid this, you’ll need to ensure that there is uniformity in your address details, with consistent formatting evident across the board. This will not only prevent any discrepancies between the address and the Royal Mail listing, but it will also shorten the amount of time taken to arrive at a decision.
It’s also crucial that you’re listed on the electoral roll, as lenders often turn to this a key verifier of your address and personal details. Not being listed can instantly result in you being denied credit, while at the very least it can turn lenders away.
2. Vague or inconsistent earnings
Lenders have a responsibility to extend offers of credit responsibly, and there are various ways in which they guarantee.
One method is to verify your earnings, both in terms of the amount that you’re paid and the regularity with which you’re remunerated for work.
Make no mistake; a lender’s interpretation of your earnings is crucial, as your monthly income must be clearly defined and preferably paid on a regular basis each week or month. Any confusion or inconsistencies in payment is likely to deter lenders, particularly if you’re on a zero-hours contract and work variable hours each week.
If this applies to you, it may be worth speaking directly to lenders and explaining your circumstances. If not, lenders are entitled to simply decline your application without seeking further clarification.
3. No track record of borrowing
When people have bad or less than perfect credit scores, they often think that refraining from seeking out new loans or lines of credit is the best course of action.
This is often not the case, as positive credit transactions can improve your score and resonate with lenders.
So, even if you’ve struggled with debt and repayments in the past, your ability to subsequently seek out new lines of credit and repay these will reflect positively on your score. Conversely, having no track record or borrowing or failing to engage in positive transactions may serve as a red flag to lenders and make it difficult for them to judge your credentials. This is likely to result in a blanket refusal, even in instances where you’ve never taken out a loan in your life.
This is why small personal loans and debt consolidation arrangements are increasingly popular, with the latter enabling you to simultaneously manage your debt more effectively and engage in the type of positive transactions that can boost your credit score.