Why can’t I get a loan?

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 has 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 “Get quotes” button at the top of the page 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.

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Check eligibility

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

• Loans for good credit
• Loans for fair credit
• Loans for bad credit

How much do you need to borrow?
£

10000

How long do you need to borrow for?

5

years

Sort by:

Product	Finder Score	Total Payable	Monthly Repayment	Representative APR
Novuna Personal Loan	Finder score 6.4Standard				Representative example: Borrow £10,000.00 over 3 years at a rate of 6.5% p.a. (fixed). Representative APR 6.5% and total payable £11,003.04 in monthly repayments of £305.64.	Check eligibilityView details Compare	loading Fetching your data...
My Community Bank Personal Loan	Finder score 6.6Standard				Representative example: Borrow £5,000 over 48 months at a rate of 24.2% pa (fixed). Representative APR 27.1% and total payable £7,853.87 in monthly repayments of £163.62.	Check eligibilityView details Compare	loading Fetching your data...
Fluro (formerly Lending Works) Personal Loan	Finder score 6.4Standard				Representative example: Assumed borrowing of £7,500.00 over 48 months at 17.9% APR representative. Monthly cost of £214.79. Total amount repayable of £10,309.78. Interest rate of 16.6% p.a.(fixed) and total fees of £150.00. Available for loan amounts between £5,000 - £25,000.	Check eligibilityView details Compare	loading Fetching your data...
thinkmoney Personal Loan	Finder score 5Standard				Representative example: If you borrow £29,100 over 12 years, initially on a fixed rate for 5 years at 8.885% and for the remaining 7 years on the Lender's standard variable rate of 9.285%, you would make 60 monthly payments of £375.53 and 84 monthly payments of £380.29.	View details Compare	loading Fetching your data...
Tesco Bank Personal Loan	Finder score 6.8Standard				Representative example: Borrow £10,000.00 over 3 years at a rate of 6.4% p.a. (fixed). Representative APR 6.4% and total payable £10,987.56 in monthly repayments of £305.21.	View details Compare	loading Fetching your data...
Zopa Personal Loan	Finder score 9.2Excellent				Representative example: Borrow £1,500.00 over 3 years at a rate of 22.9% p.a. (fixed). Representative APR 22.9% and total payable £2,028.60 in monthly repayments of £56.35.	View details Compare	loading Fetching your data...
Barclays Existing Current Account Loan	Finder score 5.9Standard				Representative example: Borrow £10,000.00 over 3 years at a rate of 6.5% p.a. (fixed). Representative APR 6.5% and total payable £11,003.04 in monthly repayments of £305.64.	View details Compare	loading Fetching your data...
Lloyds Bank Existing Customer Personal Loan	Finder score 7.4Great				Representative example: Borrow £10,000.00 over 3 years at a rate of 0.0% p.a. (fixed). Representative APR 0.0% and total payable £0.00 in monthly repayments of £0.00.	View details Compare	loading Fetching your data...
Plend personal loan	Finder score 6.6Standard				Representative example: Borrow £8,000 over 48 months at a rate of 16.66% p.a. (fixed). Representative APR 17.99% and total payable £11,013.12 in monthly repayments of £229.44.	View details Compare	loading Fetching your data...
Lendwise	Finder score 8.4Great				Representative APR 10% (fixed).	View details Compare	loading Fetching your data...
Tesco Bank Clubcard Personal Loan	Finder score 6.8Standard				Representative example: Borrow £10,000.00 over 3 years at a rate of 6.0% p.a. (fixed). Representative APR 6.0% and total payable £10,925.64 in monthly repayments of £303.49.	View details Compare	loading Fetching your data...

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Finder Score for unsecured loans

To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.

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1 - 2 of 2

How much do you need to borrow?
£

5000

How long do you need to borrow for?

2

years

Sort by:

Product	Finder Score	Total Payable	Monthly Repayment	Representative APR
Abound Personal Loan (formerly Fintern) Finder Award	Finder score 6.3Standard				Representative example: £2,000 loan repayable over 36 months. 36 monthly payments of £77.60. Rate of interest 20.2% p.a. (fixed). Representative 25.8% APR. Total amount repayable £2,793.60.	Check eligibilityView details Compare	loading Fetching your data...
Lendable Personal Loan	Finder score 10Excellent				Representative Example: Assumed borrowing of £7,500.00 over 36 months at 33.8% APR representative. Monthly cost of £316.09. Total amount repayable of £11,379.16. Interest rate of 28% p.a.(fixed) and total fees of £400.00.	View details Compare	loading Fetching your data...
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Finder Score for unsecured loans

To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.

Read the full methodology

With no guarantor

1 - 1 of 1

How much do you need to borrow?
£

3000

How long do you need to borrow for?

2

years

Sort by:

Product	Finder Score	Total Payable	Monthly Repayment	Representative APR
Finio Loans Personal Loan	Finder score 5.7Standard	£4,177.20	£174.05	39.9%	Representative example: Borrow £3,000.00 over 2 years at a rate of 39.9% p.a. (fixed). Representative APR 39.9% and total payable £4,177.20 in monthly repayments of £174.05.	Check eligibility View details Compare	loading Fetching your data...
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Finder Score for unsecured loans

To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.

Read the full methodology

With a guarantor

1 - 1 of 1

How much do you need to borrow?
£

5000

How long do you need to borrow for?

3

years

Sort by:

Product	Finder Score	Total Payable	Monthly Repayment	Representative APR
1plus1 Loans Guarantor Loan	Finder score 6.8Standard	£8,045.64	£223.49	39.9%	Representative example: Borrow £5,000.00 over 3 years at a rate of 39.9% p.a. (fixed). Representative APR 39.9% and total payable £8,045.64 in monthly repayments of £223.49.	Check eligibilityView details Compare	loading Fetching your data...
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Finder Score for unsecured loans

To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.

Read the full methodology

With a guarantor who is a homeowner

1 - 1 of 1

How much do you need to borrow?
£

5000

How long do you need to borrow for?

3

years

Sort by:

Product	Finder Score	Total Payable	Monthly Repayment	Representative APR
Norwich Trust Limited Unsecured Homeowner Loan	Finder score 7.5Great	£7,671.96	£213.11	34.9%	Representative example: Borrow £5,000.00 over 3 years at a rate of 34.9% p.a. (fixed) with an application fee of £0.00. Representative APR 34.9% and total payable £7,671.96 in monthly repayments of £213.11.	View details Compare	loading Fetching your data...
There are no providers that meet your criteria. Please change your search and try again.

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Finder Score for unsecured loans

To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.

Read the full methodology

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

• What can a personal loan be used for?

  A personal loan can be used for a wide range of purposes, including but not limited to debt consolidation, home improvement, weddings, holidays and buying a vehicle.

• How do you get approved for a personal loan?

  Ultimately, a lender will only be willing to approve your loan application if it genuinely looks like you’ll be able to pay it off. The higher the risk you are of not repaying the loan, the less likely you’ll be approved.

• How do you get a loan with bad credit?

  You can get a loan with bad credit by applying with a lender that has more lenient eligibility criteria. Some lenders have made a niche for themselves in the crowded loans market by specifically targeting people with less than perfect credit.

• How long do you have to wait to reapply after being rejected for a personal loan?

  The waiting period to reapply for a loan with a lender after being rejected varies depending on the lender but can be between 30 and 90 days. You can check with the lender to confirm the exact timeframe. It’s important to make sure you’ve strengthened your application to improve your chances of approval before applying again.

Written by

Chris Lilly

Head of publishing

Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio

Chris's expertise

Chris has written 566 Finder guides across topics including:

• Loans & credit cards
• Building credit
• Financial health
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