There can be many reasons for rejecting a loan application. Sometimes small misunderstandings, typos on the form or incorrectly completed dates decide about this. Other times it may be insufficient creditworthiness, too low earnings or too short work experience. What to do?
First, identify the reason
First ask the adviser from the bank where you applied, what is the reason for rejecting the application. Ask all the questions that you want to know the answer to and keep going until you get the real reason for refusing funding. The bank is required to inform you why you haven’t received a loan, loan, account limit, credit card, etc. Perhaps an advisor will present you with other offers or ideas for receiving funds – think about it and give yourself time to think.
Why did the bank refuse to grant a loan?
Here are the most common reasons your bank will reject your application:
- low or irregular income – maybe you earn too little in relation to the amount you are applying for or you do not receive a fixed remuneration and the bank has calculated that you will not be able to pay the monthly installment,
- short work experience – if you have been working in the current company for only a few weeks or months or you often change jobs, this is also not good news for the bank; preferred employment period in a given company is min. 12 months,
- inappropriate contract with the employer – it’s best if you work under a contract of employment or run your own business for several years; a mandate contract or a specific task contract are not adequate security for the bank, but people working on such contracts are not excluded by the bank,
- a large number of credit inquiries at BIK – have you submitted loan applications to several or a dozen banks? It was a mistake! The optimal number of inquiries appearing in BIK is from 3 to 5. Wait 3 months for them to disappear from your account and start working again,
- other financial liabilities – if you have other loans, credit cards, account limits or loans in your account, you lose your creditworthiness. The bank will not want to add more financing from itself, as it is not certain whether you will manage to pay off all your current debts,
- age – banks most often grant loans to persons aged 25-60; if you are in this age range, it bodes well,
- no credit history – credit information bureaus and debtors’ databases provide information on all historical and current repayments; if you have never applied for any product and you have not repaid installments, the bank will not receive any information about you and may reject the application.
Check your loan application
It happens that the bank receives an application with incorrect data or information about the applicant. Take a special look at any numbers you entered in the form. Check the amount of earnings; note if they are given as net or gross amount. Look at all the dates in the application – you may have accidentally shortened your work experience or incorrectly determined the duration of your contract with your employer. Just once again, calmly, step by step, review all the data that you have completed yourself, as well as those provided by your employer.
Check the debtors’ bases
Perhaps you have debts on your account that you do not know about? If you want to find out, you can download the report yourself. This option is provided by the Credit Information Bureau and the National Register of Debtors. You will find there a list of positive (i.e. your timely repayments and fees) and negative information (those whose payment you are behind).
Apply for a smaller amount
You may not have sufficient creditworthiness to receive the loan in the amount you have applied for. Try to reduce the loan amount – discuss this fact with your bank before submitting your application again. The advisor will definitely present you with a lower loan offer or offer you a longer repayment period. However, remember that a longer repayment period means a higher loan cost. Therefore, be sure to calculate it.
Think of a co-borrower
If you decide to apply for a loan with another person – a partner, someone from your family or even a friend, then the bank will take into account your joint creditworthiness and earnings. Then the chance to get a loan will increase. Remember, however, that you must be a trusted person because you will be responsible for your debt. If any of you stops paying your installment, this obligation will fall on the other person who will have to cover the whole. Joint credit is a good solution, although a bit risky.
Or maybe additional banking products?
The bank may also offer you an additional banking product. What does it mean? For example, along with the loan, you may be offered a bank account with a payment card, credit card or insurance, e.g. in the event of job loss. Such practices are common in the case of a mortgage, especially when it comes to additional policies. In this situation, pay attention primarily to the cost of these products. If the account is free, then you can easily agree on it. However, if your insurance amounts to a few or several thousand zlotys – think carefully.
Try to apply at another bank
Did you know that the amount of credit costs at different banks can vary a lot? Each bank individually sets all related credit fees, i.e. commission, interest rate and additional products. Sometimes even a low or zero commission and an attractive percentage will not compensate for the costs associated with compulsory insurance or personal bills. Each bank also adopts individual rules for examining the application, which means that you can easily get the amount you want in one institution and refuse in another.
Therefore, a very important principle is to compare the offers of several or several banks. To do this, use the cash loan comparer and select the appropriate product. However, remember not to submit an application to all banks – all your inquiries are visible in BIK, and banks see it and your credibility drops.
Get help from a credit advisor
This is a great option if you are applying for a larger amount or a mortgage. Using a credit advisor is free, which is a big plus. After meeting him, you will receive loan proposals from several banks – you’ll get a summary of the costs and parameters of specific products. Only after your approval and reflection will your credit advisor submit applications on your behalf to the institutions of your choice.
Work on your credit standing
However, if you still haven’t received the loan, don’t break down. This is a good sign – it simply means that you are not yet ready and able to repay the liability that you wanted to receive from the bank. First of all, work on your creditworthiness. If you have never had a credit card, loan or credit, then you are unbelievable in the eyes of the bank. Why? The bank does not know if you can handle any repayment, and therefore does not want to borrow you. A good solution is, for example, buying an item in installments. If you pay them back systematically, everything will be recorded in the Credit Information Bureau and your card will be empty. Remember that stores are increasingly offering 0% installments, so you won’t pay any additional costs.