A lender’s job is to access your ability to payback money given to you. It is a hard job, especially with the unemployment rate being so high.


If you’re in the market to buy a house or take out a loan to start a business or complete home renovations, you want to make sure your application is flawless. You want to give lenders little doubt about your ability to be fiscally responsible.

There are a number of ways you can fall into a hole by a lender, but there are few reasons why a lender may not give you a loan in the first place.

1. Not knowing your credit score

It seems small because the lender will run your credit regardless, but knowing your score upfront stops one more dip into your credit history and prevents the lender from wasting time trying to match you with a loan that may not work for you. Lenders appreciate applicants who are well-aware of what their score may be, as it can speed up the process of matching you with an approved loan faster.

You can also better explain your credit history once it is pulled. Your report may say you default on a credit card, but if that happened when you were in college and you’ve learned from your mistakes, it may be worth noting.

2. Not being able to explain why you need a loan

Whether you are applying for a personal loan or a business loan, you need to be able to make your case. This doesn’t mean that the sob stories get the loan every time. Lenders hear it all from lack of work to medical expenses to care for someone else. Most season lenders can also tell when you are being insincere. Your character is something that is taken into account when the lender meets with you. If you are lying or have no definitive plan for the money you seek, how can they anticipate you paying them back?

3. Not knowing how you are going to make repayments

Number two segues into number three. Lenders need to know how you are going to make repayments, and if you can’t, they need to collateral. When a lender finds an applicant who cannot vocalize this, they run for the hills.

It is understandable that you may be getting the loan because you are in direct financial need, but you must have a vision about how/when you will start paying the loan back. Once again, a seasoned lender can spot insincerity, so be sure you have your paperwork to back up your credibility. Bank statements, verification of employment, and other documentation can prove you are capable of handling the repayment process.

4. Not having settled other outstanding debt

This may be the biggest deterrent for lenders. It’s one thing to have defaulted on loans in the pass or close accounts, but it is another to have various lines of credit open. Before heading to open another loan, try to square away some on the lines of credit you have open, especially if the balances are high.


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