Are you tired of having your loans declined?
Try to determine WHY your application was denied to begin with.
Step 1. Find out why your loan application was denied.
This is most easily achieved by obtaining your credit report. You can do this for free, once per year from each credit bureau in Canada. Your credit report should make it pretty clear why you’re not getting approved for loans or other forms of credit. It could be a delinquent account listed on your report, or perhaps too many recent late payments on one of your other accounts. Perhaps you have something in collections that you weren’t aware of or maybe there is evidence of fraud on your report. Maybe you just have a low credit score. Whatever it is, you won’t find out unless you look at your report.
This seems like common sense, but you’d be amazed how many people have no idea they have poor credit. There are lots of people who have a tendency to avoid checking their credit, perhaps because deep down, some part of them knows they won’t like what they see. However, as a Canadian, you are entitled to a free credit report every year from each credit bureau in Canada and it is good, sound financial practice to take advantage of that. The first time you look, it may be worse than you thought, but seeing it right there in black ink is going to kick you into high gear to work towards bettering your credit.
While it’s true you can get a credit card with no credit, as this is how many young adults begin their borrowing career, getting a loan is an entirely different ball-game. If you’ve never borrowed before, or haven’t in a long time, chances are you have no credit score. That’s because the credit bureaus have nothing to judge your credit habits by. Start building credit today by clicking here!
Bankruptcy & Consumer Proposal
If you’ve declared bankruptcy within the last seven years, chances are, that’s why you’re being denied for a loan. The only way to deal with this is to wait it out. (or kickstart your credit re-building here)
We cannot stress enough the importance of making all of your payments ON TIME!!!
A derogatory note on your credit report is simply a late payment.
Late payments can stay on your credit report for a duration of up to six years!. It is so critical to make all your payments on time! If you have multiple late payments showing up on your credit report, you’re likely going to come up against some greater scrutiny and higher interest rates when borrowing money.
Debt-to-Income Ratio (DTI)
Your DTI is your debt-to-income ratio. How much you make, versus how much you owe. To be considered low risk for lending, your DTI should be around 43%. If your DTI is too high, potential lenders see that as a hazard sign; they can’t be sure you’re going to be able to make new payments for a new credit product on top of the ones you already have. There is only one way to lower your DTI - paying down your debts or getting a huge boost in income.
You don’t make enough money
Every lender needs to see that you earn enough to pay them back.
If a lender sees on your credit report that you’ve been applying everywhere for credit, it looks like you might be trying to get credit out of desperation. It makes lending to you riskier and leads potential lenders to think you may not be able to pay back the funds you borrow.
Credit Report Errors
You might be unpleasantly surprised to find out just how common it is for Canadians to find errors on their credit report. These can include anything from a misunderstanding with a previous lender, to identity theft. Again, the best way to prevent this from happening, or fix it as soon as it does, is to stay on top of what your credit report says. The best way to fix these errors, is by contacting the lender with whom there is an issue.
Accounts in collections
Whatever the reason is, when an account you owe on owe goes to collections, your chances of being approved for further credit are impacted severely. If you feel something has been sent to collections in error, you absolutely must get that cleared up before you apply for a loan.
You didn’t fill out the paperwork properly
This is a much easier fix than the rest of the reasons why you might get turned down for a loan. Just go over your application with a fine-toothed comb and you might spot an error.
Lenders want to see a history of stable income, so that they feel confident that your current job isn’t going to end, abruptly limiting your ability to pay back what you borrowed. If you’ve just started a new job, it might have been taken into account for your loan denial.
Step 2. Take the necessary steps to fix the issues you found on your credit report.
If there’s an error, be sure to contact the institution who made the error and have it fixed ASAP. Ensure you report any sign of identity theft or fraud to the police or lenders which it would affect. If you find out that maybe you don’t have enough credit, start building your credit profile up a little bit with secured credit products like a secured credit card or a secured savings loan. If the problem you’ve pinpointed is that your credit usage percentage is way too high, then work towards paying down your debt.
Step 3. Rebuild your credit
Unfortunately, this task is much more complicated than just making your payments on time, although that’s a fantastic start. Your credit score is so much more than whether or not you make payments on time. Want to kick-start your credit repair? CLICK HERE.
Try to lower your credit usage percentage to below 30% - that’s only 30% of all the credit you have being used. You also want to ensure you make payments on time and in full every month. Paying your credit card bills with more than the minimum payment is going to get that credit score up even faster. The more you pay, the faster your credit score will rise.
Step 4. Find the right loan provider for you
Consider the terms of your loan as well as the interest rate. If you’re looking at getting a loan from an institution that boasts high approval rates no matter your credit score, be skeptical. Consider the ultimate cost of the loan - how much more than the principal will you have to pay in the long run and what are the monthly payments? (We make it easier for you to get a loan)
Click here to start on the fast track to credit recovery.
Follow the aforementioned steps and you will help increase your chances to get approval for the loan you’re looking for. To increase those chances, even more, make sure you’re diversifying your credit products - you want to have a mix of revolving credit (credit cards, lines of credit) and installment accounts (loans, mortgages, Fast Cash Canada Loans, )