If you have been denied a loan, I am sure there are many questions floating in your head. Should you call the company that denied you the loan? Should you ignore the fact that the loan was denied? Should you go ahead and apply for another loan at another company?
However, the best thing you can do after being denied a loan is to sit back and note of the situation. Take the time to investigate where things went wrong and use it to improve your credit.
When you were denied the loan, it was most probably because of your credit. You have now been given an opportunity to improve your current credit status and you should grab it with both hands.
The first that you should do is to figure out why you were denied a loan. The law mandates that the lender has to send you a letter after denying you credit and the letter has to stipulate which factors were responsible for the lender to deny you the loan. The letter will further instruct to get a free copy of your credit report from the same credit bureau that the lender used to obtain your credit report.
You should request for a free copy of your credit report. Do not forget to also ask for a copy of credit score. You can get the copy of your credit score by just paying a few extra dollars to www.AnnualCreditReport.com and you will be able to see your actual credit score. This will enable you to see how the lenders perceive you.
Once you have your credit report in front of you, make sure you go through it with a fine toothed comb. Look carefully for any red flags and ensure that all information contained in your credit report is accurate. Things like bankruptcy, late payments etc will get expunged from your credit report in 7 to 10 years. However, if the red flags are not accurate, you can file a dispute and get your credit report fixed.
Now take a close look at your credit score because it plays a major role when the lender is processing your loan application. You will get an indication of the factors that are impacting your score and credit. This is especially true for online credit score.
Now compare the reasons in your loan denial letter with your credit report. If it matches, you can start fixing the issues that are making it difficult for you to get a loan. If there is no match, there are other reasons why the lender denied you a loan. These could be your income, length of time at your present residence, mistakes in the application or homeownership status. You can find out the exact reason by calling the lender's customer support for further information.
Give yourself a few months before applying for another loan. Most probably by then you credit score and overall credit would be in a better shape. Once your credit has improved, you can go ahead and apply for a loan. A point to remember is that every time you apply for a loan, your credit is affected because of the inquiries. That is why it does not make sense to apply for multiple loans at the same time.
Sometimes being denied a loan is not a bad thing. It is an opportunity to improve your credit and finances.
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