Struggling to get a loan?

Struggling to get a loan?

No one likes being turned down. But getting a ‘no’ answer to your loan application doesn’t have to be the end of the story. It shouldn’t normally mean you can’t borrow in the future. And in the long run, it could actually be a good thing. Why? Because once you’ve fixed the issues that are stopping you getting a loan, you’ll almost always be in a better place money-wise.  It can be a challenge. But help is at hand.

Ready to turn things around? Here are the top 5 reasons why we turn applications down – and what you can do to turn that ‘no’ into a ‘yes’.

 Issue #1: You don’t have enough money after food and bills

Life is expensive! Sometimes just paying for the basics can use up almost all your income. If this sounds like you, then you might not have enough left over to afford loan repayments. Luckily there’s help available. Charities like Turn2Us can help you find ways to cut costs and boost your income.

Keeping a spending diary for a week may also help you work out where money could be saved, all those little expenses soon add up! 

Look through your bank statement, (yes the one that is sitting unopened in a drawer J) and see exactly where your money is being spent.  What we think we spend on things such as food each week is often very different in reality when we add on the extra little top up shops, takeaways or shop bought lunches.

Once you’ve got a bit more money in your budget, you’ll have a better chance of applying successfully.

 Issue #2: You’re in too much debt

If your repayments on loans, store cards or credit cards add up to more than you can afford to pay back or if you can only cover the minimum payments each month, alarm bells start ringing, As it stands, you’re not getting on top of your debt, and borrowing more is just going to get you into more trouble. Don’t panic! Set up a budget and write it all down or find someone who can help you put together a payment plan to get your finances back on track. Make sure you keep up with the repayments on your plan for at least few months in a row before you reapply to stand a better chance of getting a ‘yes’.

 Issue #3: You’ve missed repayments

If your recent track record of repaying debt isn’t perfect, we could take this as a worrying sign. We won’t usually turn you down just for one or two missed payments – unless you’ve applied for a large amount – but if you’ve missed more and/or they were for different debts, it could spell trouble. You might have ‘defaulted’ (missed a series of payments) on a loan, store/credit card or even a bill like your mobile phone. If this is true for you, you’ll need to do your best to make sure you don't miss payments again. As long as you can afford your minimum repayments, a good idea is to set up Direct Debits to pay them automatically (then pay more on top if you can). Making a few on-time payments in a row could be enough to show us you’re now ready to borrow. But depending on the size of the loan you’re after, we might also ask you to wait until you’ve paid off more of what you currently owe.

If you’re struggling to pay your minimums, get free debt advice ASAP. Charities like Talk2Us and Step Change will be on your side, and help you find the best way to get your debts under control. Your debt adviser will help you put together a payment plan. Follow it for a few months then send a copy to us, or bring it to our branch, when you reapply to boost your chances of success.

Issue #4: The information on your application doesn’t match up.

As part of the loan application assessment we undertake a number of checks which may include a credit search.  It is important that the information in your application matches the information that you provide. 

We often lend to members that have experienced previous financial difficulties however if you do not tell us about them it may raise concerns that you are not dealing with your current debts and therefore we would not be a responsible lender if we increased your borrowing further.

If you have had a County Court judgement against you, we expect you to tell us all about it.  If you do not tell us about it and we then find it on your credit search we are unlikely to lend to you as it makes us suspicious about what else you may be hiding.  We can often lend to members who have had CCJ’s but only where they have been upfront about previous financial issues and can show that they are taking positive steps to address their debts.   

If you’ve had serious money troubles and are sorting them out with a DRO, Bankruptcy or IVA, we are unable to lend to you until after that situation has ended.  Once you have been 'discharged' from your DRO/IVA/Bankruptcy we may consider lending, but please contact us before making an application so we can talk through your options.

Issue #5: You’ve just moved to a new house, or started a new job

Your address is an important proof of ID. So, if you’ve just moved, you’ll probably need to wait until you have official proof of your new address before you can apply for a loan. This may be a copy of your tenancy agreement or your council tax bill for example. 

Your bank statements are also an important part of your application so if the address on these is different from that on your application we may require additional proofs.

If you’ve recently come off benefits and started a job – congratulations! We understand that starting a new job can play havoc with your finances and instigate changes with your benefits which may make it difficult for us to assess the affordability of a loan.   Sometimes we may ask that you get through your probationary period (usually 3 months) and have your benefits reassessed where appropriate before we can consider a loan application.

Still not sure why you got a ‘no’? Get in touch, and we’ll be happy to give you some feedback.

Remember: sometimes there’s more than one reason why we must say ‘no’, and the reasons will vary depending on the type of loan. But at the end of the day we’re on your side – we want to help you get into a position where we can say ‘yes’ – every time.

Don’t forget, every application we receive is considered by a human being not a computer.  We understand that every situation is different and life doesn’t always fit nicely into little boxes.  Even if you’ve struggled to get loans in the past, we are friendly and approachable and may still be able to help.