Whether you’re looking for a loan to consolidate your debts, buy a car, purchase a new house, or start your business, a loan refusal can feel like a disaster. When your loan application is refused, you’re left wondering what to do next and where you can go from here. You can’t just put your life on hold because of a rejection, but how you proceed from here will define the next years of your financial future.
The first piece of advice you should follow is this: stop applying for more loans.
If you’ve bee refused a loan, there’s probably a good reason for it and it’s time to take your finances into account. You may still be able to find a lender who will give you the money you need, but with a bad credit history, lenders consider you a high risk and will only lend you money at higher interest rates. That can be very bad for your future, so take a step back and find out why you were rejected in the first place. There are a few likely reasons.
1. You Owe Too Much
The first thing any lender will look at is how much money you already owe, including mortgages, car loans, and unsecured loans. Their only concern before lending money is whether or not you can be trusted to pay it back, which means assessing everything from your income to how much you already owe to your credit history. It may be time to recognize that you don’t need a new loan, you need help dealing with debt you’ve already accrued.
2. You Don’t Earn Enough To Loan
The flip side of reason #1 is your income. A lender takes your income and calculates whether or not you will likely be able to pay back the debt. It may come as a surprise when a financial institution tells you that you can’t afford something, especially if you’ve done the numbers yourself and you’re certain you can make payments. Take a look at your credit report and try to see what they’re seeing.
3. Bad Credit History
Your credit history stays with you and mistakes you’ve made in the past can continue to haunt you. Late payments on loans, rent, or utilities will show up on your credit history, as will applications for loans, bankruptcies, and debts that went to collection.
Credit counseling can help you rebuild your credit history, get out of debt, and put yourself in a position to successfully apply for a loan. Credit counseling in North York, Brampton, Mississauga, Scarborough, Ajax, and other parts of Toronto is available at places like David Sklar & Associates.
They are Licensed Insolvency Trustees who also file bankruptcies and Consumer Proposals in Ontario. As part of their credit counseling program, at David Sklar & Associates you can learn how to take control of your finances and use credit to build your financial prosperity rather than hurt it. Debt help can be easy, you just need someone to show you how to do it.
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