Have you just been refused a bank loan? Are you stressed about what to do next? Don’t worry! We’ve provided a guide to help you figure out why you have been refused a bank loan and what active steps you can take to remedy the situation.
Find out why your loan has been refused
The most important thing you can do if you have just been refused a bank loan is to find out why you have been refused it. Whether it was a personal or business loan, it is extremely important to find out the reasons why it has been refused so you can improve your future prospects.
Possible reasons you may have been refused a bank loan
If you have a low credit score, banks may be reluctant to provide you with a loan. Low credit scores can be caused by late payment of bills or already owing money.
Negative credit information
If you have repeatedly missed payments or made late payments, banks will see you as too much of a risk and may refuse to provide you with a loan.
Inability to pay it back
If the bank believes that your income is too low to pay back the loan you’re applying for, they will refuse it.
What steps you can take
Work on improving your credit score
You can improve your credit score by making sure that you never make a late payment – this can be done easily by setting up a direct debit to automatically pay on time.
Fix any credit errors
Make sure that the bank has an accurate account of your credit history in case any mistakes have been made or logged incorrectly.
Work on paying off any existing debt
Continue to work on paying off any existing debt that you have to make you more suitable for another loan.
There are many alternatives you can consider, from other banks, credit unions and last resort lenders to help you get back on track rather than re-applying to the same bank, which will most likely be ineffective.
Refused a bank loan – Where to find out more
There are many other alternatives to a bank loan if you’re looking for finance for your business. Instead of buying equipment and vehicles, you could try leasing them or you could look at alternative finance options that will help you grow your business from strength to strength. We can help, take a look at our business finance section to find out more. Or get in touch if you’d like to discuss how we can help. We have access to alternative finance providers and can help with short-term business loan to help you achieve your business expansion goals.