Loan Declined? What to do When the Bank Says No (2024)

It’s often the case to have your loan declined at a time when you need money the most. It can be frustrating to have your loan declined, especially with little to no explanation of why? In this article, we help to provide some insight as to why your loan was declined. We also provide some ways you can improve your financial standing to get an approval in the future!

Reasons Why You Could’ve Had a Loan Declined

There are many reasons why you could have a loan declined. Each bank follows its own lending criteria to determine eligibility for loans. While it’s impossible to know exactly what each lender is looking for, the reason for a declined loan usually boils down to one of three main reasons:

1. Loan Declined Due to Your Credit Rating

Your creditors will mark your activity on your credit report each time you interact with them. This credit report gives you a credit score which indicates to lenders whether you are a high or low risk client. For example, if you are more than 3 months behind with credit card repayments, it is likely you will have a default on your credit file. Defaults will give you a bad credit rating and lenders will be reluctant to lend you more money. There are many things which may impact your credit rating including:

• mortgage arrears
• late payments
• too many enquiries
• tax debt
• overdue bills

You can get a free copy of your credit file once every 12 months. If you are concerned your loan was declined due to bad credit, consider applying for a bad credit home loan with us.

2. Loan Declined Due to Affordability

Lenders need to make sure you will be able to afford the loan repayments. Not only now, but into the future. Your creditors will calculate your debts to see if you have enough left to afford your loan. Your creditors can also decline your loan due to irregular income. If you have an irregular income or if you are struggling with a number of unsecured debts like credit cards and personal loans, we can help. Revive Financial can negotiate with your creditors to reduce your unsecured debts as part of a debt consolidation.

3. Loan Declined Due to Security

Lenders will often decline a loan if a person has no security or deposit to offer upon the application. In order to borrow large amounts of money, say for a home loan, a lender will often require some kind of security first. You may need to have a certain percentage saved of the amount you wish to borrow. They may also ask you for a guarantor.

When Can I Apply Again After My Loan Declined?

If you have had a loan declined, it can be tempting to rush out and apply again through a different bank. However, if one major lender declines your loan application, the chances of a different major lender approving your loan are slim. But don’t worry, there are options available to you.

Don’t apply again for at least another 6 months. In that time, pay any unpaid bills and catch up on any debt repayments you’ve missed. Make sure you pay your bills in full and on time and where you can, start to put some money aside to show the bank you can save. All this good activity should help to improve your credit score and you will be able to apply again after 6 months.

Home Loan Declined for Debt Consolidation

Buying property is the biggest financial decision most people will make in their lives. It will also provide you with your greatest asset. When unsecured debts like credit cards and old bills get out of control you can draw on the equity in your mortgage to consolidate your debt.

But by the time people get around to refinancing, they have a long list of debts they are struggling to pay. This results in a declined loan application due to their credit file. Revive Financial is a specialty lender in this space and provides a comprehensive financial solution for people in need. We negotiate with your creditors to reduce your unsecured debts, then consolidate them into an easy, manageable home refinance. If your current lender has declined your loan, speak to us! We may be able to help.

How to Avoid Having Your Loan Declined

So you’ve had a loan declined. There are things you can do to improve your financial position and help get your loan approved in the future.

Pay Your Overdue Debts

Pay off your overdue bills and outstanding debts. If you have received a default for these payments, it will remain on your credit file for 5 years. You may have success if you ring your creditor and ask them to remove the default if you pay your debt in full. Regardless of if they agree, if you pay off the debt, it won’t cause any more damage to your credit file. As far as your creditors are concerned, a repaid debt is better than an outstanding one.

Be Selective With Your Applications

Don’t make several applications for the same loan within a short period of time. All the applications you make will be noted on your credit file, regardless if you follow through with the application or not. Six or seven enquiries on your credit file contributes negatively to your credit score. If you are rejected; wait at least 6 months before applying again.

Go with the Right Lender

Major banks have very selective criteria. If you know you have a bad credit rating or a number of unsecured debts, consider finding a specialty lender. Revive Financial can find loans for people who would otherwise be declined. We aim to improve your financial situation before we offer you a loan so you are in a better position to make your repayments.

Revive Financial Says Yes!

We see things differently at Revive Financial. We specialise in assisting individuals who have faced financial challenges and have been turned down by other lenders. We can help if you have:

• bad credit
• late payments
• defaults
• been bankrupt or in a Part IX (9) Debt Agreement

We offer a range of services designed to help you reduce and consolidate your debts into one new home loan to help you get back on track. Revive Financial prides itself on having experienced non judgemental staff on hand to help resolve all your Debt issues. For Free Confidential Advice please call our friendly team on 1800 534 534.

For more information on debt consolidation and how it can assist you in reducing debt, check out our debt consolidation page.