How to bounce back from a loan denial

So you’ve been denied a loan. What do you do now? What exactly is the next step? Should you call the company that denied you the loan? Should you simply ignore the denial? Should you apply for another loan from another institution? There are many questions that go thru one’s mind when credit is denied. The best thing to do is to simply relax and use the moment to investigate and improve your credit.

When you are turned down for a loan, you are given the opportunity to get your credit fixed; being turned down for credit can become a good thing. Whenever you are turned down for credit, you are getting a hint about your current credit status and/or financial state.

The first thing to do when you’re denied credit is to figure out exactly why you were turned down. The law obligates credit issuers to send you a letter shortly after denying you credit. This letter describes which factors played a roll in the denial. In that notice, you will also receive instruction on obtaining a free copy of your credit report from the credit bureau the credit lender used to obtain your credit report and process your application.

Although you can go ahead and request a free copy of your credit report from the notice of denial, the process can be rather lengthy. The best thing to do is go ahead and request one of the three free credit reports that you’re allowed to get. In case you don’t know, every American is now entitled to three free credit reports per year, one from each of the three credit bureaus. You can get a free copy of your credit report once, every twelve months through or you can purchase a copy online in just a few minutes. Which ever you choose, make sure that you also request a copy of your credit score. For a few extra dollars, you can see your actual credit score. This credit score will enable you to see how lenders see you.


Once you receive a copy of your credit report, it is extremely important to peruse it. Examine your credit report for any red flags. Collection accounts, late payments, and bankruptcy fillings can all lower your credit score and make you appear as a risky borrower to lenders. If you do have late payments, collection accounts, or bankruptcy fillings that are accurate on your credit report, you can expect them to be expunged from your credit report in about seven to ten years. If the red flags aren’t accurate, you can fight it off by filing a dispute to have your credit report fixed.

On top of looking for errors, you should also take a close look at your credit score. Your credit score plays a big role in the lender’s decision process. Nowadays, your online credit score should come with an analysis that tells you the factors that are impacting your score and credit. Some even come with calculators that show you how your score will be affected in a number of scenarios. For instance, you can see how high your credit score will increase if you paid off your debt on time for the next year, or how high it will increase if you paid off your entire revolving credit balance.

If you are one of the many victims of identity theft, it is extremely important to respond in a timely manner, and that does not mean whenever you have time. It means now! By reporting identity theft to the credit bureaus and law enforcement quickly, you make it easier to have the negative information removed from your credit report.

Once you receive the denial letter, you can use it to see if its reasons for denial of credit matches with the information on your credit report. If it does match, will have a head start on fixing the issues that are making it hard for you to obtain credit. If the reason and your credit report don’t match, there could be other factors that played in lender’s decision. The lenders could have rejected your request for credit due to your income, length of time at your present residence, errors in the application, state restrictions, or homeownership status. The best way to find out the exact reason is to call the lender’s customer support for more information.

The denial letter includes instructions on how to obtain a free copy of your credit report from the bureau that was used to make the decision regarding your credit request. You are entitled to receive one copy of your credit report every time you are denied credit. This free credit report that you’re entitled to does not affect the three free reports you can get per year; every time you get denied for credit, you are entitled to a free report. Don’t let this free credit report go to waste. Go ahead and request the free credit report. Use that free credit report to see if any changes were made to your credit report since the last time you got your copy.

Give yourself, and your credit a few months before applying for credit again. It takes time for credit scores and credit, overall, to improve. Once your credit has improved and you feel confident that you merit that loan or credit card, go ahead and apply again. If you know you’re not ready to apply for a loan or credit card due to your credit, by all means, don’t. Every time you apply for a loan, your credit is hurt a little bit due to the inquiries. It makes no sense to apply for multiple loans if you know you’re not going to get approved. It’s only going to end up hurting your credit in the end.

If you’re in dire need of money now and you cannot get a personal loan, you can try other ways of getting the money. Credit cards, emergency loans, savings, family, and friends are all viable options for obtaining cash.

In the end, remember that being turned down for credit isn’t always a bad thing. It is an eye opener and a chance for you to improve your credit and your finances. It’s a wake up call to make better financial choices and to be in charge of your finances.