Working through rejection

At the end of the loan application process, the lender will inform you of their decision. Getting denied is can be disappointing and even embarrassing. Instead of wallowing, you should be proactive in determining why your application is denied. Finding out the cause will help you figure out the best way to approach your next application.

Federal law requires that you receive written notice of credit application rejection. Therefore, if your lender answers no at the end of the loan application process, you will receive a document detailing the reason(s) you were denied. This document will also tell you which reporting bureau provided the information the decision was based on.

If, after receiving this information, you are still not clear about why your application was rejected, you should simply ask the company to explain. Ask them to be as specific as possible so that you can address whatever the problem may be. That way, when you go through the loan application process with another lender, you will increase your chance for success.

One common reason behind credit denial is inadequate income. If your income is relatively low and unlikely to increase, or if you can’t seem to find enough money for a substantial down payment, you should research alternative loans designed for people in such situations.

Another reason behind credit denial might be a lackluster credit report. In this case, you should request a copy of your credit report so that you can address whatever problem is lowering your credit score.

Keep in mind that approval criteria vary from company to company. If you are denied, shop around for a lender that frequently deals with customers who have similar backgrounds.