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“I Need a Loan but Keep Getting Declined”: Here’s Why

Posted February 5, 2020 by in Lifestyle
Purse on table

    

 Almost 80% of Americans find themselves living paycheck to paycheck. That means only one unexpected expense can wreak financial havoc on their life.

What happens when that unexpected expense is necessary, such as an emergency room visit or a flat tire? In these cases, many Americans seek loans to help them get through this rough financial time.

Do you find yourself saying, “I need a loan but keep getting declined”? If so, keep reading to learn how to fix the problem:

Low Credit Score

One of the first things that a potential lender looks at is a person’s credit score. This is a three-digit number used to determine your financial history and credit eligibility.

Your credit score is determined by the following:

  • Payment history — 35%
  • Current outstanding loan amounts — 30%
  • Length of credit history — 15%
  • Different types of credit — 10%
  • New Credit — 10%

Once you check your credit score, you’ll have a better idea of how lenders will perceive you. A “good” credit score is a score of 720 or above. A “bad” credit score is anything below 580.

It is possible to get a personal loan with no credit, but expect the process to be more difficult.

No Proof of Income

After looking at your credit score, a potential lender will then ask for proof of income. More specifically, they’ll require you provide several months of paystubs.

While this task is easy and straight-forward when it comes to traditional employment, it gets more complicated for others. If you’re someone who is self-employed or a contract employee, you most likely don’t receive traditional paystubs. But, this doesn’t mean that you can’t prove your income.

Ask the potential lender if they will accept alternative documents for proof of income. This could include tax documents, invoices, or bank statements. Many lenders will accept these documents after you explain the situation.

You’re Looking at the Wrong Lenders

If you need a loan but have been refused everywhere, you may not be looking at the right lenders. Finding a loan is all about finding a lender who understands your situation and trusts you to repay it. Some lenders are known for being more willing to loan to people, and that’s where you should be looking.

A few phrases to be on the lookout for include:

  • No credit check
  • Guaranteed approval
  • Payday lender

Lenders who boast any of those phrases are typically more lenient with their approval requirements.


After reading this article, you now know why you’ve been saying, “I need a loan but keep getting declined”. Instead of repeating this phrase for eternity, take steps to reverse the reasons listed above.

Start by finding out what your credit score is and work on raising it. Then, gather proof of income to prove you can repay the loan, even if you don’t have traditional employment. Finally, look for a lender that isn’t as picky with their financing qualifications.

Now that you can receive a loan, use it to get ahead this year. Head to the Lifestyle section of this site for budgeting and money-saving techniques.