6 Things to Do If You Can’t Get Approved for a Loan

FT Contributor
A loan application is stamped "denied."

Getting denied when you apply for a loan can be frustrating. If you continually get rejected when you apply for credit, it could become frightening. You may fear that your life will get put on hold. How can you buy a home, get a car, or consolidate your debts if you cannot borrow money?

If you can’t get a loan, the best strategy is to take steps to improve your chances of getting approved. Usually, there is nothing that you can do about past application rejections. However, you can avoid future rejections by taking a few simple steps to repair your credit.

Some steps after a loan rejection may take time, while others can be as simple as submitting the best possible loan application. Here are six actions that you can choose if you can’t get approved for a loan.

Table of Contents

1. Determine the Reason You Were Declined

The first step is to figure out why your loan application was not approved. In some cases, the reason may be apparent to you. Perhaps you have a poor credit score because of past credit card usage mistakes. If you have never had a loan or credit card before, the lender may not have enough information about you to approve your application.

Other factors may include not having sufficient income to meet the requirements of the lender. This problem can occur when you do not have a stable monthly income or do not meet debt-to-income ratio requirements.

If you are unsure of the reason for the denial, you can directly contact the lender to see why your application did not get approved. Even if you’re able to guess at the reason for the refusal, you may want to talk to the lender to be sure. Once you know what happened with your application, you will know which specific areas you need to work on before applying for another loan.

If you understand the issues, you can spend your time working on those things that will improve your chances without wasting time on those issues that will not affect your next application.

2. Build or Repair Your Credit

Often, the main reason for an application denial is a poor credit score. Lenders will look at your FICO credit score when they review your application. The higher this three-digit number, the better your credit score. A score below 580 is poor, and a score of 669 or less is fair. Most lenders prefer applicants with a good (over 670) or very good (740 or more) score.

If you aren’t sure of your credit score, you can get a full report from the three major credit bureaus, TransUnion, Equifax, and Experian. They offer scores for free once per year through a joint website called

If your score falls below 670, you can take steps to increase your credit score to qualify for loans in the future. Even if the score wasn’t the sole reason for your application denial, a better score could qualify you for loans with lower interest rates.

3. Increase Your Income

In addition to your credit score, lenders also look at your income when reviewing your application. If you do not meet revenue requirements, you may need to find ways to increase your income.

This step, of course, is easier said than done. However, there are a couple of options for increasing your income.

The first option is to ask for a raise at your current job. Your employer may or may not grant your request, but it doesn’t hurt to ask before taking other steps to earn additional income.

A second job can also help increase your cash flow. Thanks to gig economy jobs, earning more does not require getting a second job with a set schedule. You can work such jobs when you have time as long as you work enough hours to meet your income goals.

The combination of additional income and an improved credit score can help you qualify for loans and get loans with favorable terms, such as low-interest rates and manageable repayment terms.

4. Shop for Lenders

If you get denied at one bank, you can seek out other lenders. Some banks or credit unions may have different requirements and may approve your loan application.

Shopping for lenders is an option, but if you have a low income or poor credit score, you are likely to run into the same problems regardless of the bank or credit union. Some lenders, however, specialize in offering personal loans for people with poor credit.

The advantage of shopping for lenders who will work with you in your current financial state is that if you find one, you do not have to wait until you improve your credit score or increase your income.

5. Try a Short-Term Strategy

If you need a loan quickly, you can try some additional short-term strategies.

  • Ask for a lower amount: If income is an issue, you can try asking for less money. Asking for a smaller amount may lower your debt-to-income ratio so that you can qualify, or it could help you meet monthly payment requirements with your current income.
  • Make a large down payment: Another option is to lower the amount of the loan by making a large down payment. This option may not be feasible if you do not have money saved. However, it could lower the amount of money that you have to pay back and, therefore, help the lender reduce their risk.
  • Get a cosigner: Getting a cosigner is another way that you can get a loan by lowering the risk for the lender. A cosigner is someone with more income, a better credit score, and other traits that make it easier for them to qualify for a loan. If you are young and do not have a credit history, getting a cosigner could be a good option.
  • Put up property or assets as collateral: Another short-term loan application option is to secure the loan with something that you own. Like the other short-term strategies, this option lowers the risk for the lender. They will loan you the money, but if you do not repay it, then they can seize the assets and sell them to get their money back. The most common types of collateral are houses or vehicles. In some situations, you can also use investments, jewelry or other valuables, or future paychecks.

6. Apply Again

Improving your chances of getting a loan in the future takes effort and planning. However, you shouldn’t lose sight of the end goal: to apply again and have your application approved.

When you apply, make sure that you find a lender whose requirements you can meet and carefully complete the application in a way that shows that you can now meet those requirements.

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