Lenders actually have varying loan approval standards. You may realize that you can easily get loan approval from one loan provider and be disapproved on another. If this is the case, you may look around to find programs that truly match your criteria.
There is no guarantee that your loan application will be instantly and easily approved. You should expect the unexpected and be prepared to take rejection. Once you get disapproval, don’t treat it as the end of the road for you. Instead, be sure to be successful in getting approval for a loan next time. Here are some recommended measures you should take.
Determine the reasons for disapproval
Just as when dealing with any problem, the first major step for resolution is to determine the root cause. This should not be a problem because it can be easier to identify the possible reasons for the loan application disapproval. The loan provider may have disclosed its reasons for declining. If not, you may consider major factors like your credit history, required income, and completion of documents.
Correct any error, if there is any
If your loan was disapproved because of your insufficient income, you should correct this problem by applying for a loan that is intended for borrowers within your salary bracket. If you are getting a secured loan, you may have been asking for a loan that is equivalent to about 96% to 100% of your collateral’s appraised valuation. Try to renegotiate and make necessary adjustments before resubmitting the loan application. Be sure you are qualified to apply for and obtain specific loan products.
Improve your credit score
If the rejection was based on a poor credit score, you should aim to deal with it. First, ask for a copy of your credit report to make sure there is no error in reporting. If there is any mistake, immediately seek correction from credit reporting agencies. Your score may also be reflecting negative transactions that you did not actually make. If your credit score is really low, you may opt to take special loans available specifically for bad-credit borrowers. You may spend some time generating positive scores to boost your credit history so that you may have a stronger rating when you apply again for a loan.
Apply for a new loan
After doing all the measures described, you may start to fill out forms and apply for a new loan. It could be from the same loan provider that rejected you or from another lender. If there were corrections on your files, you may immediately resubmit a loan application to the same lender. If you were disapproved due to other factors, consider those reasons and move on to find other lenders.
Know what type of loan you need and how much you actually require. Now is the time to consider as many loan providers as you possibly can. If a bank’s approval is elusive, why not consider non-traditional loan providers, which may have better offers and less stringent policies on providing loan approvals?
You had found the property of your dreams, but your bank refused to give you the credit requested? Do not worry, it does not mean you have to give up buying.
Loan refused … protected buyer
If the loan is refused, you must notify the seller and the notary, and give them a certificate provided by the bank.
Good to know. In case of refusal of credit, even after the signed sales agreement, there is a protection for the buyer, the condition precedent of a loan. It is mandatory that is to say that even if the compromise does not mention it, it applies (unless the buyer specifies that he buys without borrowing or that he does not wish to benefit from this device).
Warning: The compromise must detail the amount, the duration and the rate of the loan you are going to ask, and the refusal must correspond to this request so that the condition precedent can play. In case of refusal of a loan, the sums you have paid must be fully refunded.
Hit the right door
A loan refused by an institution does not mean that all banks will refuse it. Nothing prevents you from trying others. The reason for the refusal may or may not be justified by the bank. If it is, try to find the main argument that motivated it to try to overcome it and present a new and stronger file. If you are sure of the feasibility of your project, go to other institutions yourself, or use a broker who will negotiate for you, will direct you to the organization that best fits your profile.
If we can play on certain aspects of the financial package, other criteria are crippling, as a rate of effort too important. No bank accepts a refund exceeding 33% of revenues. To also proscribe, an accumulation of consumer loans, chronic overdrafts, a registration in the national file of payment incidents, or gambling expenses. A fragile professional situation can play against the plaintiff, who will have to compensate with a good personal contribution and show, by his account, that he will be able to repay the credit.
Being convincing, facing a bank, means showing that you are a good manager. As well as the level of income, the ability to save is essential: put little aside, but regularly. The account must be impeccable in the months preceding the loan application. To increase one’s personal contribution, even of little, plays too. One can solicit the family solidarity, unlock the profit-sharing of his company, use the Housing Action Loan (better known as “1% housing”), or learn about the aid given by some municipalities to first-time buyers.
Playing on the loan term is also possible. The risk taken by the bank increases with it, so we can try to reduce it; a year or two is often enough. Reverse solution: lengthening the duration of the credit reduces the amount of the monthly payment, so to respect the rule of the 33% of indebtedness. Everything depends on your case, but do not forget to argue about the relevance of your purchase: build quality, location, dynamic market, are reassuring criteria, in the case of a resale as a mortgage.