Getting a rejection on a loan application can be disheartening. If you’ve applied for a mortgage loan to buy your dream home and been rejected, it can be tempting to give up the idea of becoming a homeowner.
Fortunately, there are some ways you can turn a rejected loan application into an approval. Always keep in mind that banks reject loan applications for a number of reasons, most of which can be fixed with relative ease.
Here are some tips that can improve your chances of qualifying for a mortgage loan and getting an approval on your next bank loan application.
Know Why You Were Rejected
Banks lend money based on their own lending policies. If your loan application didn’t fit within their lending criteria, chances are that you received a rejection already.
Rather than assume you know what the problem was, call the lender and ask for information about why your application was rejected. The lender may tell you your credit score was too low for their policy. They may tell you that your existing debts and repayment liabilities were too high to qualify for the amount of money you’re seeking. They might simply say you were aiming at a property that was too expensive for your current income level.
No matter what reason is given, knowing the truth makes it much easier to rectify the problem for your next application.
Order Your Credit File
Order a copy of your credit file and see what’s on there. Check what your credit score is and what your creditors have reported about your level of financial responsibility.
Look for any mistakes on there that could be affecting your overall score. If you find any entries that don’t belong on your credit report, aim to get them fixed as quickly as possible. When you know what’s on your credit report, you’re in a good position to start repairing any problems.
Catch Up Your Bills
Be sure you don’t have any outstanding bills or late payments hanging over your head. If you do, work out a way to catch up those past-due bills as quickly as you can.
Reduce Your Monthly Debts
Even if you do have a good credit score and always keep up with your payments on time, it’s still possible to get your loan application rejected. It’s common for lenders to reject loan applications if your debt-to-income ratio is too high.
When your application is assessed, the bank considers your take-home income first. Then they deduct how much you’re paying on your total monthly debts, including the approximate amount you’ll pay every month on your new loan repayments. If the total amount of your repayments is too high, chances are you’ll be rejected.
You can improve your chances of getting your loan approved by reducing your monthly debts. Focus on paying off your credit card balances and work on ways to reduce the amount outstanding on any personal loans you have.
Alternatively, you might consider whether rolling your outstanding debts into a consolidation loan, with specialists like http://banking.loans/, can help you reduce your monthly repayment commitments. The key is to find positive ways to reduce your monthly repayments, which can help increase your overall borrowing capacity on a mortgage loan.
Changing your loan from a rejection to an approval becomes much easier when you understand what lenders want to see on your application. Work on ways to strengthen your overall finances and you’ll find it’s much easier to improve your chances of being approved for your next mortgage loan application.
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