Why was my loan application rejected?
This is the first question that comes to mind of the borrower whose application has been rejected. There can be many reasons for such a bank’s decision, but it cannot be denied that creditworthiness is one of the most common reasons for a rejection by the lender. There are several areas that have a particular impact on the financing decision.
The key factors in assessing the loan or loan application are:
- stability of employment and income,
- credit history
- history of cooperation with the bank (e.g. how long you have been actively using your personal account)
- completeness and correctness of completing the application
The most common reasons for rejecting a loan application
Banks do not always provide information on the reasons for rejecting an application, which is why the borrower sometimes has to find out the reasons for this decision himself, which requires some work and time. First of all, you need to know the most common reasons for rejecting an application, and then check which one of them influenced your decision.
The most common reasons for rejecting a loan application can be divided into financial and formal.
Financial reasons for rejecting an application
- Too low creditworthiness – the debt of all Polish citizens is registered in the Credit Information Bureau. Based on the data contained in the Retrodatabase, banks assess the risk associated with granting the loan. If the applicant is late or does not settle his financial obligations at all, the negative Retrodatabase entry alone will be the basis for rejecting the loan application
- Lack of stable income – employment stability and normalized income are the basis for banks considering the application. Some professional groups (e.g. freelance workers) have special conditions to meet to get a loan.
- Active loan at another bank – lenders sometimes reserve that the customer can only have one active loan at a time. If the applicant is in arrears with a loan from another bank, it may turn out that it is the reason for the negative decision.
- Incorrectly completed registration form – anyone may make a mistake when entering data into the registration form. A typo in the name or phone number may result in rejection of the application, because the bank always checks the compliance of the borrower’s data.
- False data in the application – this type of error is most often manifested by inflating the borrower’s income or lowering the status of its debt. Regardless of whether the false data was provided accidentally or intentionally, such an error completely disqualifies the applicant at the start and prevents the possibility of obtaining financing in this bank in the future.
- Failure to meet the bank’s formal requirements – the internal arrangements of the banks set out the standards that their borrower must meet. Some financial institutions require that they are at least 18 years old, while others only grant loans for 23 years. It also happens that lenders set an upper age limit – e.g. up to 65 years
- Incorrect confirmation of identity – every bank needs confirmation of its identity from the customer. Most often he does it using a verification transfer or a special application. The verification transfer should be made according to the strict bank rules from the borrower’s personal account. If the applicant makes a mistake in entering the data for the transfer, or sends it from another account, the loan application will be rejected.
Loan application rejected – what can you do?
First of all, of course, you need to find the reason that had a decisive impact on the rejection of the loan application. You should carefully analyze your situation – even if the borrower is confident of his income and creditworthiness, he should check all possible causes – both financial and formal.
For example, it may turn out that the applicant is in arrears with old multimedia fees, or has not paid installments for RTV equipment on time. Such situations can also be a reason for rejecting a loan application, therefore one of the first steps should be to analyze your creditworthiness by checking your history in the Retrodatabase debtors database.
It is also worth remembering that rejecting a loan application in one bank does not mean that competitors will make the same decision. Financial institutions often have their own credit risk assessment systems, so you should also try to get a loan from another bank.