Eastern Savings & Loans Team
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. This could be by switching to a cheaper energy supplier, or claiming benefits you didn’t know were an option. You can contact Turn2Us through their website http://advicefinder.turn2us.org.uk/ You might also be able to save money on food. Try the mySupermarket app or www.mysupermarket.co.uk, where you can search for products and find out the cheapest place to buy them. 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, 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! 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. And when you do, send us a copy of your repayment plan by email or post (or bring it to our branch) to stand a better chance of getting a ‘yes’.
Issue #3: You’ve missed repayments
If your 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 StepChange 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. If you’ve had serious money troubles and are sorting them out with a DRO, Bankruptcy or IVA, you must wait until that situation has ended, then get written confirmation that you've been 'discharged'. Once that’s done we will still consider lending, but please contact us before making an application so we can talk through your options. If you have had a County Court judgement against you we expect you to tell us all about it. If you can show you have been addressing your debts for a few months we will think about lending to you.
Issue #4: You’ve never borrowed before
If you’ve never borrowed before, it leaves us with a big question mark. How will this person deal with debt? If this is you, show us you’re serious by putting together a budget and a plan for repaying the money you want to borrow. Send these to us when you reapply, and you might just turn that ‘no’ into a ‘yes’. Need help with your budget? Get in touch with Talk2Us.
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 a month before you can take out a loan. Make sure you update your address on the electoral register, or register to vote if you haven’t already. If you aren’t registered, it will always be harder to borrow.
If you’ve recently come off benefits and started a job – congratulations! You’ll just need to get through your probationary period (usually 3 months) before we can consider you. Send us your new application once that’s done.
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.
Ready to reapply? Now you know what it takes, visit our website loans page and make a great application!
Don’t forget, we (human beings) review every application. Even if you’ve struggled to get loans in the past, we may still be able to help.