Reasons Why Your Consolidation Loan Application Was Rejected

Consolidation loans are some of the most sought-after debt solutions on the market, with numerous applicants looking for a way out of multiple debt obligations. Unfortunately, due to this product’s high demand, lenders will likely set strict approval terms, leaving most with rejected offers. There are several reasons why this could happen, so here are a few factors to be on the lookout for.

You Have a Low Credit Score

Low credit scores do not just reflect poorly on your household purchase requests but will also be essential for your consolidation loan applications. Your score tells a lot about your financial behavior, such as how much debt you utilize and whether you can pay it back on time. If your score is below 650, this warrants a rejection, as you represent a high-risk borrower. Alternative Symple Lending solutions will come in handy here, allowing you to fix your credit score as you gear up for your next consolidation options.

You Do Not Have a Sufficient Credit History

Lack of sufficient credit history also lowers your chances of getting a successful loan application. Evidence such as two years worth of your statements will come in handy here, with a credit card and income reports being ideal. Your mortgage records and auto loan payments can also substitute for your primary income records. Knowledgeable associate at Symple Lending experts advocate for timely payments for successful applications, with missed deadlines reflecting poorly. Keep in mind that expensive purchases will also work against you, increasing the likelihood of loan denial.

You Have Too Much Debt

Too much debt could also result in a loan rejection. If you owe too much debt, chances are you will also need a substantial loan to help you keep up with your lifestyle. Lenders need some form of guarantee that you can repay your loan, which will likely reflect poorly due to your high debt-to-income ratio. A lower ratio will be ideal when making your consolidation application, with a high income compared to debts allowing you to stand the best chance of approval.

Lack of Collateral

While not all loans will require collateral, having something of value that lenders can use for insurance will be essential. If you have no car or home that your lender can hold onto, it may be the reason for rejection. Items such as boats and investments will also come in handy for this, lowering your risk when applying for a consolidation loan.

Low Income

Your income will also be a huge part of your loan rejection. Lenders often opt for borrowers who make enough to repay their debt and still have a surplus to cater to their daily needs. Being at the lower end of the income spectrum could hinder your chances of making the cut-off. Ensure you first review your income level and the loan amount you intend to get, with a lower loan value ideal for a lower income.

Numerous consolidation loans call for sound financial habits, with low credit scores, insufficient credit history reports, and lack of security lowering your chances of a successful application. Additionally, if you also have too much debt and have a low income, this could also hamper your application process. Make it a point to pay your debt on time and have an updated record of your payments.