Applying for and obtaining a loan is sometimes difficult in the United States. To obtain a loan, you must know what the best options are for your case. Here you have some to try again and get approved.
MiamiDiario Editorial Staff
When applying for a loan you should ALWAYS consider that you will be evaluated. That’s why you should determine what your best option is. From there, create a strategy to achieve credit.
That’s why we decided to give you the most important tips to get your credit approved on your next attempt.
The most important thing to know is that the rejection of a loan application is not related to the amount you apply for,” said Solo Dinero.
Why is a loan denied?
The first thing the lender investigates is whether the person is trustworthy and pays his debts. Some of the reasons why they accept or deny a loan are:
- Debt-to-Income Ratio
- Credit Score
- Payment history
It should be noted that not all lenders require the latter. However, those who do consider it do so to ensure that the person has a stable income and is stable in a job or business.
If you do not comply with any of the points, and this is considered by the bank or financial entity, then you will be denied the loan.
The debt-to-income ratio and the credit score are the most important factors that can cause you to be rejected.
What do I do if my application is rejected?
The Federal Trade Commission’s Equal Credit Opportunity Act gives the customer the right to know why they were turned down for a loan or line of credit.
Under the Equal Credit Opportunity Act, “the creditor is required to give the applicant a notice of adverse action with the reason for denial if the applicant requests it within 60 days of receiving the borrower’s decision.
This aspect is optional. Of course, if you request it, it is because you must have fulfilled some of the requirements. You may find that there was an error on your credit report that can be corrected before you apply for another loan.
How to increase the chances of approval?
Most importantly, when they have the lender’s report, you will know where they need to direct the loan application strategy.
If it is by score. You should settle your debts as soon as possible and improve the creditors’ confidence.
If it is for the debt-to-income ratio. You should also settle your debts in a way that is most effective for you. There is a method called “snowballing” or “avalanche”. The important thing is that the percentage of your debt compared to your income decreases to a healthy and reliable point for lenders.
You must be realistic. If it’s hard to pay your credit card, loan, or utility bills now, then you should hope for a better time to apply for your loan.
Translated by: Aleuzenev Nogales