Why can’t I get a loan?

There's no magic trick to getting approved for a personal loan, but there are ways to find willing but competitive lenders more quickly and easily.

Find lenders that will say Yes

  • See your personalised rates
  • Good and bad credit histories accepted
  • Fast funding with no hidden costs

Would-be borrowers can find themselves on a lender’s rejection pile for a variety of reasons. Most commonly, it’s because you don’t meet all the lender’s eligibility requirements – like residency, employment status, minimum income, etc. – or because your credit profile isn’t what the lender’s looking for. Either way, it’s pretty frustrating stuff.

The good news is there are plenty of lenders out there, targeting different sections of the market. The goal is to identify which of those lenders can help you, and then which of those can provide the cheapest loan.

Understanding why your application was been rejected

If you’ve been rejected for a loan, try to find out what went wrong. Many lenders will automatically provide you with the reason you were rejected, but if that didn’t happen, you could contact the lender to request an explanation.

Lenders have basic eligibility criteria which they typically publish for all to see. This covers things like being a UK resident, being within a specific age range or earning over a specific threshold. They might also specify a list of unacceptable loan purposes. If you didn’t meet the lender’s basic eligibility criteria, they should be upfront about this.

However, lenders also check your credit record, and frustratingly, they don’t publish exactly what it is they’re looking for. Naturally people who can demonstrate a positive history of responsible use of credit are more attractive to loan companies, but at the same time, some lenders are specifically seeking to help those with lower credit scores. If it was the credit check that held you back, then it’s simply a question of finding the lenders that can lend to credit profiles like yours.

Either way, it’s a smart idea to get to know your credit file. That way you’re seeing the same thing the lenders are.

Once you’ve determined the reason you couldn’t get a loan, whether it’s because of your credit history, current financial position, or some other reason, you can work to fix the issue before applying again or you can look elsewhere.

5 tips to improve your chances of getting approved

  1. Don’t apply without checking if you’re likely to get approved. If you apply for a personal loan and are rejected, it’ll show up on your credit history. Multiple rejections may make it harder for you to get approved in future.
  2. Check multiple lenders in one go
. Blindly applying for loans directly with the lender can be time-consuming and counter-productive. Knowing where you stand with a range of lenders gives you a better idea of whether you’ll be approved. Click the green “Find a loan” button above to compare which loans you could get today.
  3. Get familiar with your credit history and what you can do to improve it. Many people don’t know their current credit score or even what’s listed on their credit history. There are a number of things you can do to improve your credit rating, from getting yourself on the electoral roll to paying off existing loans and closing credit accounts you don’t use. On rare occasions, there can be mistakes in credit files which might act against you (the good news is that it’s relatively easy to get these fixed).
  4. Double-check your details before you hit apply. It may seem obvious but even simple mistakes on your application, such as putting in the wrong date of birth or address, can impact your chances of approval.
  5. Make the best case you can for yourself. Understanding your own financial situation and borrowing power is key to getting approved for a loan. While you may think you’ll be more likely to be approved if you apply to pay off your loan within a year, this may be seen as unrealistic by the lender and increase your chances of rejection. Always apply for a sensible amount, over a sensible term, for a legitimate purpose.
LOQBOX

Build your credit history while you save with LOQBOX

  • Save from £20 to £200 a month
  • Build and improve your credit history
  • Once you’ve finished unlock your savings
Promoted

What’s the best reason to give for a personal loan?

Most lenders will let you apply for a loan provided it’s for a worthwhile purpose. This includes paying for a wedding, a car, a holiday, home improvements or to consolidate your debt.

While there is no “best” reason to put on your loan application, there are a number of things that you’ll be unable to get a loan for. This includes things like borrowing money for gambling, investing and any illegal activities. This also includes getting a loan that you then use as a down payment or deposit on a larger loan.

Ultimately, the reason you give on your application should be truthful. If you lie on a loan application, you’re likely to risk damaging your profile. Even if the lender believes you, if they find out at a later date, the loan could be called in. In a worst-case scenario, you could end up with a Cifas marker against your name (simply meaning you’ve been flagged in the fraud database as a potential offender).

Compare your personal loan options

Table: sorted by representative APR, promoted deals first
Name Product Total Payable Monthly Repayment Representative APR Link
Zopa Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 5 years at a rate of 8.8% p.a. (fixed) with an application fee of £240.00. Representative APR 9.9% and total payable £12,602.87 in monthly repayments of £210.05.
Hitachi Personal Finance Hitachi Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.2% p.a. (fixed). Representative APR 3.2% and total payable £10,493.64 in monthly repayments of £291.49.
Lending Works Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 7.1% p.a. (fixed) with an application fee of £0.00. Representative APR 10.7% and total payable £11,651.40 in monthly repayments of £323.65.
Barclays Bank Existing Current Account Customer Barclayloan
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 7.9% p.a. (fixed). Representative APR 7.9% and total payable £11,219.04 in monthly repayments of £311.64.
Lloyds Bank Existing Customer Personal Loan
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 3.9% p.a. (fixed). Representative APR 3.9% and total payable £10,601.64 in monthly repayments of £294.49.
My Community Bank Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 17.1% p.a. (fixed). Representative APR 17.1% and total payable £12,636.72 in monthly repayments of £351.02.
loading

Compare up to 4 providers

Name Product Total Payable Monthly Repayment Representative APR Link
118 118 Money Personal Loan
Check eligibility
View details
Representative example: Borrow £2,000.00 over 2 years at a rate of 49.9% p.a. (fixed). Representative APR 49.9% and total payable £2,967.36 in monthly repayments of £123.64.
loading

Compare up to 4 providers

With no guarantor

Name Product Total Payable Monthly Repayment Representative APR Link
Likely Loans Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 59.9% p.a. (fixed). Representative APR 59.9% and total payable £19,010.16 in monthly repayments of £528.06.
loading

Compare up to 4 providers

With a guarantor

Name Product Total Payable Monthly Repayment Representative APR Link
Trusttwo Trusttwo (Tenant Guarantor) Personal Loan
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 36.9% p.a. (fixed). Representative APR 36.9% and total payable £15,644.16 in monthly repayments of £434.56.
1plus1 Loans Guarantor Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 47.8% p.a. (fixed). Representative APR 47.8% and total payable £17,259.12 in monthly repayments of £479.42.
loading

Compare up to 4 providers

With a guarantor who is a homeowner

Name Product Total Payable Monthly Repayment Representative APR Link
UK Credit Limited Homeowner Guarantor Loan
View details
Representative example: Borrow £20,000.00 over 3 years at a rate of 19.9% p.a. (fixed). Representative APR 19.9% and total payable £26,133.12 in monthly repayments of £725.92.
Trusttwo Trusttwo (Homeowner Guarantor) Personal Loan
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 36.9% p.a. (fixed). Representative APR 36.9% and total payable £15,644.16 in monthly repayments of £434.56.
loading

Compare up to 4 providers

Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.

Late repayments can cause you serious money problems. See our debt help guides.

7 common reasons personal loan applications are rejected

These are things you should avoid when applying for a personal loan:

  1. Bad or limited credit history. While all “bad credit” is usually pooled into one, there are varying levels of bad credit. For example, you may have never defaulted on any loans or credit cards, but you might have applied for a lot of loans in the past, or you may simply not have enough proof that you use credit responsibly. You can always check your credit score to see where you stand before applying.
  2. Insufficient income. The lender can’t approve your application if they find that your income and outgoings make your monthly repayments unaffordable. Lenders usually have a minimum income you need to earn in order to be eligible for the loan, so check the eligibility criteria. If they don’t have eligibility criteria, work out what repayments you’ll need to make and if these will be manageable on your income.
  3. Dubious loan purpose. Check that you’re able to finance what you need to with the loan you’re applying for. Many loans come with restrictions as to how the funds can be used, for example gambling, investing or using one loan as a deposit to get a second loan. If your lender finds out that your loan purpose isn’t credible, your chances of loan rejection could be quite high.
  4. Incorrect details. Lenders will usually verify the details you put in your application, and they may reject your application if they find inconsistencies.
  5. Unstable employment or insufficient employment history. Lenders are very meticulous about the stability of your job. Quite a number of lenders insist that you should have a stable job, otherwise they may reject your loan.
  6. You hold too many loans. If you’re currently holding several loans, this could give a lender cause to reject you.
  7. Low value of secured assets. If you’re applying for a secured loan, lenders have restrictions on the asset (normally a property) that you use as collateral, like age and condition, so if your asset doesn’t meet these requirements your loan could be rejected.

Things to consider when applying for a personal loan

  • Limit your number of applications. When you apply for a loan, the application is counted as an inquiry on your credit report. Too many inquiries can negatively affect your credit score.
  • Keep your credit report clean. You can make this happen by paying your debts on time and by not defaulting on any loans. It’s important to keep track of your financials and not take on loans you can’t afford.
  • Check your credit report. You should keep monitoring your credit report and ensure the information is up to date. You may need to dispute an error on your credit report if you find something incorrect

The bottom line

There’s no way to completely guarantee that your personal loan application will be approved. Even if you meet all the eligibility criteria listed by a lender, the lender can still reject your application at its discretion. What you can do is avoid common mistakes that lead to personal loan application rejection and follow the tips we’ve discussed to improve your chances of approval.

Frequently asked questions

Will you be approved?

Check your personalised rates and likelihood of acceptance.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Bridging loan vs commercial mortgage

    Find out if a bridging loan or commercial mortgage would suit you if you’re buying or refinancing commercial property and when a bridging loan can be a better option.

  • Limited company loans

    See how to get a business loan as a limited company in the UK, and how much you can borrow.

  • Sole trader loans

    Find out how to get a loan if you work for yourself, including which lenders offer business loans for sole traders.

  • Commercial bridging loan

    Everything you need to know about commercial bridging loans. We look at when they’re useful, how they work and what to be aware of before taking one out.

  • Hard money loans: Short-term finance in the UK

    Learn everything you need to know about hard money loans – also known as bridging loans. Find out how they work, what they can be used for and their benefits and downsides.

  • 100% bridging loans: How to get one

    Read our in-depth guide to 100% bridging loans, including how bridging loans work, how to borrow 100% of the property’s value, how to get the best deal and the pros and cons.

  • Loans for small businesses affected by coronavirus

    Learn about government support and alternative options for businesses needing finance to help deal with the impact of coronavirus.

  • Compare bridging loan rates for property development

    Everything you need to know about the benefits of using a bridging loan to fund a property development project if you don’t have the cash already available.

  • Compare bridging loans to buy land

    Find out if a bridging loan could be a good option versus other types of finance if you’re buying land.

  • Compare residential bridging loan rates

    Everything you need to know about residential bridging loans, including what to consider before taking one out, what they can be used for and their pros and cons.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked
Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site