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Reasons Your Personal Loan Application Was Declined

February 23, 2012 | Comments: 0 | Views: 151

People apply for personal loans for a lot of different reasons, but sometime those applications are denied. If you have ever been denied for a personal loan and aren't sure why, you may be wondering why or what the most common reasons are for a loan to be denied. Perhaps you haven't applied for your loan yet, by keeping in mind these reasons that get applications denied, you can work to get your loan application approved.

One reason may be because of your credit score. People that have credit problems are normally seen as a big risk and won't want to lend you anything. Your credit score may not seem to bad to begin with, but if there are any issues on your report, like unpaid of late bills, then that shows them that you will be more likely to miss payments on your loan. If you have been a victim of identity theft, it may be reflected in your credit score. Yes, you have no control over becoming a victim of identity theft, but it can take a while to get the issue resolved and even off of your report. Another thing that will show up in your history is if you have defaulted on any loan or credit card payment. This will definitely get your application denied if they see it on your credit history.

Sometimes you will be denied because of your income. If the amount that you make will not be enough to support repayment of the loan, then banks probably won't lend you any money. Lenders generally want people whose income is enough to be able to pay them back. If you are just barely scraping by and don't show any signs of getting more or a better income, then you are still a big risk.

Lenders may also take into account your employment history. If you have not held a job for a while, or hop from job to job, you should expect that you will be denied for a loan. This kind of goes along with your income at times and can make you come off as a big risk to lenders. For those of you who jump from job to job, it shows them that you don't have stable employment, and therefore you don't have stable income. The way they think about it is, if they lend you a certain amount with a certain monthly payment and then you either quit or lose your job, you would no longer be able to afford payments on your loan.

Generally, they like to see that you have not only had a stable job for at least a year, but that you have also had a stable income for that year. So, if you are a contractor for a year and a few months a year make half of what you normally do, they may think that it will happen again and you will miss or fall behind on your payments. They also like to see that you have a credit history that has been built up with three lines of credit for, again, at least a year. Your credit report and score are like a snap shot of your financial stability and bill payments, which hopefully it shows they are all on time. If your application has been denied for any of these reasons, don't give up hope; there are bad credit personal loans that are available. If you have been denied, it is best to wait to apply again. Work on any of these problem areas then shop around for a personal loan quote before you apply again.

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Source: EzineArticles
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