Rejected by a lender? Here’s some of the common reasons they denied your application.
Wondering why your application wasn’t approved? We take you through some of the most common reasons why a lender may have decided not to work with you.
1. You have too many existing payday loans
When you apply for a payday loan, lenders want to determine whether you can afford the loan, so as part of your application they will look at your current financial situation.
- If you have any other payday loans that you’re currently repaying.
- If you’ve taken out more than one payday loan in the past 90 days.
- If you are using this payday loan to repay another payday loan.
For some lenders, if any of the above is the case, that’s enough reason to reject you for a loan.
2. You’re unemployed
If you don’t have a regular source of income, many lenders will question your ability to repay your loan. While there are lenders who consider unemployed applicants, your acceptance usually hinges on a source of income–whether that be steady work or government benefits. If you don’t meet these criteria, it may be why you were rejected.
3. Welfare is your only source of income
Although there are lenders who accept borrowers on welfare, you’ll generally need supplementary income. If you only have welfare payments, this is likely a reason for rejection.
4. There are overdrafts on your bank account
When you apply for a payday loan online, lenders may ask to see a copy of your latest bank statements. If your history shows that you’ve dishonored payments–that’s when a creditor has attempted to debit from your account and there wasn’t enough money–you look like a risk, and a risky application is more likely to be rejected.
5. You’re paid in cash
Being paid in cash can make it difficult for you to be approved. Lenders need to be able to verify your income, usually through your bank statements. If you don’t deposit the cash you receive into your account each pay cycle, then lenders won’t be able to verify it. Instead, you’ll need to find a lender who is willing to use your payslips as verification. If a lender couldn’t verify your income, this is a likely reason your application was rejected.
6. You have a bankruptcy on your record
Lenders use your financial situation to determine the risk in lending to you. If you have a recent bankruptcy on your record (within the past year), you may be flagged as high risk and rejected. However, there are still options for people with bankruptcy on their record.
7. You didn’t meet the minimum requirements
Before applying for a payday loan, you should make sure you meet the minimum criteria listed on the lender’s website. These criteria are set to establish who the lender will accept. If you didn’t meet all of the criteria, this is likely why you were rejected. In addition, lenders also have internal scoring systems where they allocate points to help determine your eligibility. If your score doesn’t add up, your application is unlikely to be approved.
Compare lender-connection services
These providers work to help connect you to a short-term loan you’re likely to qualify for. Submit your information and potentially receive loan offers from a network of lenders.
There are multiple reasons why you might have been rejected for a loan, but don’t be discouraged. You can review your application to make sure you didn’t miss any information or work through a lender-matching service. Not every loan option is right for you so be sure to consider all your options and compare the costs before applying again.