Why Was My Loan Application Rejected?

Why Was My Loan Application Rejected?

No one likes to hear or see the word rejected, denied, not approved, or just simply no; especially on or for a loan application.

When you apply for a loan, there is a reason, you need the loan for (insert reason here), and being denied or rejected for that loan changes your entire plan. It may change your life if you are applying for a car loan and need a car to get to and from work.

So a negative response is not what we need, and in some instances you may not even know why your loan application as rejected.

One thing you always need to keep in mind is that lenders want to grant/make loans. That is the business they are in. If they do not make loans, they will not be in business.

So rejecting a loan application is the last thing they want to do, however, in some instances they cannot grant a loan for various reasons.

So what are those reasons that a lender may not approve a loan application?


One of the main factors lenders look at in granting a loan is affordability, they want the loan to be repaid.

If you apply for a loan amount that is too high, or outside your ability to repay the loan, the loan may be rejected, and in some instances the lender may approve the loan, but for a reduced more affordable amount.

When applying for a loan, most lenders will ask you to complete an income and expenditure form, outlining all your income and expenses.

Prior to applying for a loan, is is a wise thing to prepare an I&E form for yourself, so you know and can show affordability for the loan you request.


Credit history and credit scores are also important when applying for a loan, and a low credit score could be a reason why a loan is rejected.

As we will see with other reasons why a loan may be denied, it is good to get a copy of your credit history prior to applying for a loan. You can review it for any errors and omissions and have these corrected prior to applying.

Errors on Your Credit File

As we just mentioned, getting a copy of your credit history prior to applying for a loan is a wise move. There may be errors on your credit history that reduce your credit score. This also ties in with Fraud: If someone has used your identity in the past and taken out loans or has some how tarnished your credit, you may not find out unless you review your credit file.

Too Much Debt

Being overextended and having high balances on your credit cards and other accounts not only lowers your credit score, but could also be a reason why a loan application may be rejected.

It also ties in with affordability. If you are overextended with your accounts, you may be struggling to make those payments, which means there is an affordability issue with any new loans.


Just as we mentioned getting a copy of your credit history prior to applying for a loan to see if it is in order, there may be some documents a lender may request in order to approve a loan.

You may be asked to provide wage statements, bank statements, and other documentation in order to verify your income and expenses.

If you are self-employed you may need to show the past few years tax returns or have an accountant’s statement.

If you cannot prove what you have stated on the loan application, a lender could reject the loan.

What To Do Before Reapplying

Prior to applying for a loan it is always god to get a copy of your credit history and review it and also know your credit score.

Having done an income and expense sheet prior to applying is good as well, that way you have thse details at hand when a lender requests them.

In addition to having any and all documents a lender may request.

Being prepared will not only make the loan process go quickly and smooth, but also increase your chances of being approved.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.