Getting rejected on a loan application is undoubtedly frustrating. A lender should provide a free credit report and the reason for rejecting the loan, as individuals share confusion.

While you can turn to other funding sources like asking your friends and tapping savings for quick requirements, you should know the reasons for rejection. It can be anything from having bad credit to unreliable income support. The blog lists the reasons and ways to prepare for loan approval in the first go.

I need a loan but keep getting declined. Why?

There can be multiple reasons for a lender to deny your loan application. Fortunately, you do not have to guess, as the lenders provide you with the reason for rejection. Here are some common explanations why a lender may refuse your loan application:

  • Low or poor credit score
  • Wrong information on the application form
  • Unauthentic or insufficient income source
  • Applying for a higher amount than what you qualify for
  • High debt-to-income ratio
  • Not presenting sufficient documents asked
  • Having a joint account with someone

7 Tips to Get the loan after rejection

It is disheartening when you need a loan and are refused everywhere in the UK marketplace. However, rejection does not mean the end. Here are some tips to help you get approval on your next loan application. Start from scratch- from reviewing your debts to identifying the glitches in your previous loan application. Check how:

1)     Work on your credit score improvement


A low credit score or poor credit history is the primary reason for rejection of the loan. A bad credit score indicates risk. Hence, most lenders reject the application:


Identify the debts impacting the application approval. It is the high-interest debts that affect approval chances. If your credit profile has any loans like- payday loans, student loans, or credit card debts, try to pay these. Moreover, address paid debts and report them to agencies. Keep your address and financial information updated- from income to your name on the electoral roll.

  • Check spelling and details while filing an application

The application form is the primary way to connect with the lender and get instant cash for your needs. It asks for general information like- name, contact number, email, and the amount required for the initial process. Mentioning wrong details or spelling errors leads to loan rejection.


Assure that whatever attributes you nourish align with your identity and income proof. Check for the spelling and contact number mentioned in the electoral roll or driving license. Do not bluff about anything that is not true to your knowledge. For example, write the amount you receive as income on your current payslip.

3)     Unauthentic income source

In some loans like payday, no guarantor loans, quick loans, etc., the primary mode of loan approval is income.  A lender demands authentic income proof in the form of part-time/ regular/ income from benefits, etc.

The loan amount you need should be less than the monthly income.

 It is the reason lenders require income proof. Presenting an unreal income source straightaway leads to loan rejection. Income from gambling and related sources is not deemed reliable.


Provide an authentic and existing payslip/ tax returns/ invoices/pension/ income from benefits or part-time income. If you have one or more income, reveal the other only if required.

4)     Apply for a reasonable amount

It is one of the considerably noteworthy things to consider when applying for any loan. Before picking any amount, analyse the outgoings, bills, and loan repayments to pay from the salary. After that, if money remains- it is known as disposable income.

If you get income in cash, lenders may not consider it. It is the prime reason self-employed find it hard to get approval.  Any recent or immediate deposits or big fund transfers from your account may trigger an additional inquiry. It may delay the loan approval process.


Ensure to ask for a reasonable amount you can pay later with your disposable income. Your credit file should mostly reveal cash transfers from authentic resources or direct deposits in your bank account.

5)     Keep your expenses low or balanced

 As mentioned above, your income should qualify to pay the money in scheduled repayments. Try to cut back on unnecessary expenses impacting the debt-to-income ratio. It is the ratio of your monthly income to monthly expenses. If your monthly expenses are higher, you’re your monthly income. You have a high debt-to-income ratio. In this case, the lender may reject the loan application.


It is important to prioritise expenses before spending. Do this by drafting a budget by identifying necessary and emergency expenses monthly. It may include bills to pay, groceries, child education fees, credit card payments, repayments, or any medical emergency.  Try to reduce unnecessary expenses like- taking up a few more subscriptions, dining out often, and ordering food often, until its utmost is necessary.

6)     Present the exact documents that a lender asks for

Every lender asks for specific documents before approving the loan. It can be an ID proof, salary proof in the form of a pay slip, self-assessment if working as self-employed, guarantor details (if lenders mandate one), or collateral or asset details.


It is important to know the lender’s document requirements before applying. Arrange and prepare the documents before applying. Ensure authentic documents to gain instant approval on the loans. You generally scan the documents and mail them to the lender for further loan processing online. Identify whether the document is updated or not before sending it.

7)     Remove your name from the joint account

Joint accounts are usually between the family members like- husband, wife, father and son or daughter, mother and daughter, or with a distant relative. If you have any such account, it may impact your credit score and loan approval.


 It is ideal to remove the name if you no longer deal with the account. Ask the other person involved in the joint account to decide right. It projects you in reliable light and helps you qualify for the loan.

Bottom line

These solutions or tips may help you recover from a loan rejection and get approval. Some credit profile does not require much homework. One can get a loan by clearing off some debts. Others should analyse the credit equation deeply. Apart from debt removal, ensure authentic income, phone number, and residential details to qualify.  Identify the lender’s criteria before applying for a loan. It will help you choose the right one and get approval.

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