Many people assume that a Credit score is the only thing to consider when applying for a loan.  However, there are plenty of other contributing factors.  If your loans keep getting rejected, and you don’t know why, maybe there are some things you haven’t considered.

Why Are Loans Rejected?

While a good credit score is definitely important, it doesn’t help much if you’ve only had it for a short period of time.  Lenders consider the consistency of credit history when accepting or rejecting loan applicants.  This means they will typically approve loans for those who have had good credit for longer periods of time and will be more skeptical of a good credit score achieved only recently.  Inconsistency of income, residence, and employment are also heavily scrutinized.

How Can I Fix It?

We highly recommend waiting to have a good credit score for over a year before taking out any new loans.  It also makes sense to wait for at least 6 months, after changing residence or jobs, before applying for new credit.  If you are reliable for a long period of time, lenders will be much more likely to grant loans to you.

With different types of loans, it can get confusing.  Do your research to know exactly what to expect before applying for different types of credit.  It is also helpful to know that there are several models used to calculate credit scores, all of which can return different results.  The popular FICO system itself has 28 different versions.

Good credit scores also only get you through the first screening, there are also income requirements, down payments, and other debt to consider.  Make sure you know your income-to-debt ratio and be sure to chip away at other debts before applying for more.  If your credit history has been good for some time, ask your lender to calculate your credit score using a variety of methods to improve your chances of approval.

What Can I Do if I Can’t Pay Off Previous Debts?

If you can’t keep up with your debts, bankruptcy is something to consider.  Learn more about how bankruptcy can help by contacting your Yuba City bankruptcy attorney at (530) 797-4402.

The post Why Do My Loan Applications Get Rejected and How Can I Fix It? appeared first on Law Office of Seth L. Hanson.