
Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Updated
Being denied for a personal loan can leave you feeling blindsided, confused or ashamed. Rather than accepting the setback, take action to learn more and improve your financial situation so that your next application is a success.
The Equal Credit Opportunity Act requires lenders to provide a written explanation of why your application was denied. If the lender doesn’t provide this document, you have 60 days to file a request. This explanation can be useful in determining if there’s a problem in your credit report.
A personal loan isn’t always denied because of poor credit. Other common problems include:
Industry tips to increase your chances of getting a personal loan
Your credit score forms the backbone of your overall credit history. This summary of your borrowing history is how lenders determine if you’re a good investment choice and can pay off your balance each month.
Before you reapply for a loan, you should order and examine your credit report. You’re entitled to a free copy of your credit report every year from the three nationwide credit reporting companies:
You’ll need to provide your full name, contact information, Social Security number and date of birth.
When examining your report, you could find that it shows you owe on account you’ve since paid off or have open credit cards you’ve never owned. Even small errors and typos can affect how a lender scores your default risk. Document these errors and dispute them with each of the credit bureaus.
The main influences on your credit score are your payment history, your total debt, the average age of your credit accounts and the number and types of credit accounts that you have.
Be aware that the three credit bureaus each use proprietary algorithms when crunching the numbers in your report. This means that no two lenders will review your credit report in exactly the same way. Review your credit history annually to stay on top of making sure that lenders are seeing only the most accurate picture of your financial health.
Requirements and eligibility criteria will vary by lender. You have the option of researching other lenders for a personal loan that could meet your needs.
But you’ll want to limit how many times you apply before addressing the issues that underlie your loan denial. Each time you apply for a loan, the lender will conduct a hard pull on your credit score, potentially affecting your score for up to a year. If you continuously apply for loans and are denied, you could further lower your overall credit score.
Installment loans tend to have more lenient eligibility requirements than personal loans and may be able to still get you the loan amount you need. Explore your options to see if any fit your needs.
Explore other types of lenders for personal loan alternatives
A connection service, or marketplace, could help find a loan you’re more likely to qualify for. You submit your information once to potentially be paired with a lender in its network.
Consider waiting before attempting to apply for another personal loan. With time on your side, you can work to improve your financial situation by paying down your debts and addressing the structural issues of your finances — which can increase your chance of approval in the future.
Don’t let a personal loan denial discourage you. Do your research and plan your finances accordingly to improve your credit score and fix any underlying issues. Once you’ve done your research and know what you need to increase your chances of approval, view some of your online personal loan options to get started on your decision.
Reduce your debt by around 30% after fees — but only if you can stick with the program. Here’s how.
Don’t be fooled by false promises — here are red flags to watch out for and tips to find a legit company.
The White House announced new changes to PPP loans, helping the smallest businesses and opening access to people with student loan defaults or nonfraudulent felony convictions.
Credit counseling, debt relief programs and more options to consider.
The fee-free Upgrade Card offers 1.5% cash back, but it lacks many standard benefits.
Biden took office on Wednesday, but interest rates didn’t seem to take much note. Here’s the outlook for the year ahead.
Compare 6 lenders to find one that’s a good fit for your needs.
Most federal student loan borrowers now have eight more months of the interest-free payment freeze.
Is it time to refinance your FHA to a conventional loan?
12 unique financing options — including SBA loans — for new and established franchises.