We want to let you know that there are several reasons why your loan application may not be approved. These reasons can include not meeting the basic requirements such as income and credit score, having other outstanding loans, or the lender not being able to lend more for the month.

Here at Pachyy, we understand how discouraging it can be to have your loan application rejected, whether you’re applying for a credit card, personal loan, or mortgage.

If you find yourself thinking “I need a loan but keep getting declined,” don’t worry! We’re here to help. In this article, we will explain why your loan request may have been denied and explore alternative options that may be available to you.

Common Reasons Why Your Loan Application Was Declined

• You did not meet the basic criteria for the loan
• Your credit score did not meet the requirements
• Your income might not have met the lender’s guidelines
• Your affordability and debt-to-loan ratio may not have been favorable
• Other trust factors may have affected the decision
• The lender currently has limited capacity to lend out more

We understand that having your loan application declined can be frustrating. Please review the above reasons to better understand why your application was not approved. Feel free to reach out to our customer support if you have any questions or need assistance in improving your loan application for future consideration.

Not Meeting the Basic Criteria

When applying for any type of loan in the US, such as personal loans, title loans, or payday loans, it’s important to understand the minimum criteria set by lenders. Meeting these criteria is necessary to be eligible for the loan.

The basic requirements usually include being at least 18 years old, a US resident, and working either full-time or part-time. Additionally, lenders usually have a minimum income requirement, and they require a valid checking account, email address, and cell phone number. They also consider if you have recently filed for bankruptcy.

It’s important to note that these criteria may vary among lenders. While you might meet the initial requirements, some lenders can be more strict, especially when it comes to minimum monthly income. This can also apply to individuals who are on welfare, self-employed, or have recently started a new job.

If you do not meet the basic criteria mentioned above, your loan application is likely to be declined early on.

Not Meeting The Minimum Credit Score Requirements

When you apply for a loan, the lender will typically check your credit history to see how well you have managed your financial obligations in the past, such as credit cards, loans, utility bills, and cell phone bills. It’s an automated process with predefined rules. First, you need to meet the initial criteria mentioned above, and then the lender will run a credit check. This usually happens very quickly.

The lender has a minimum credit score requirement, which is usually a specific number like 600 or 700. If your score meets or exceeds this requirement, you can move on to the next stage. However, if your score is below this threshold, your loan application will likely be declined.

There are some exceptions to this rule. Sometimes your age, homeownership status, and existing mortgage can carry more weight in the lender’s decision, even if your credit score is lower than average. However, as a general rule, having a good or fair credit score is usually necessary for mortgages, personal loans, and credit cards.

Your Income is Essential for Loan Eligibility

Your income plays a crucial role in determining whether you qualify for a loan, as it serves as the primary source to repay your loan. It is important for the lender to ensure that you have a steady and sufficient income.

Some lenders may require a minimum monthly earnings of $800 or $1,000, while others may consider part-time employment with a monthly income of $500. However, these requirements can vary among different lenders.

The lender takes into account your monthly income along with your other financial obligations such as rent, food, and transportation. They need to assess how much you can borrow based on your income and expenses. Requesting to borrow an excessive amount may give the impression that you are living beyond your means, which could result in a rejection from the lender.

Understanding Affordability and Debt-to-Loan Ratio

When you apply for a loan, it’s important to consider your affordability and debt-to-loan ratio. This means examining how much you can borrow compared to what you can comfortably repay.

Let’s say you’re looking to borrow money, and your monthly income seems sufficient to cover the loan. However, lenders also take into account your overall financial obligations, such as outstanding debts and other loans. They want to ensure that you can handle your loan payments along with other monthly expenses like credit card bills, rent, and any other loans you might have.

In some instances, lenders may determine that you cannot afford the loan you’re requesting, resulting in a loan rejection.

In other cases, lenders may agree to provide you with a loan but may adjust the amount based on their evaluation of your affordability. For example, if you request $1,000, they might suggest that the maximum you can borrow right now is $500 or $600.

Other Trust Factors – Please Ensure Your Details are Accurate

When submitting your application, it’s important to provide accurate information to avoid any potential issues that could lead to your loan application being declined.

This includes:

• Ensuring your name and date of birth match up correctly
• Ensuring your name and address match up correctly
• Avoiding significant discrepancies between your name and email address
• Not submitting multiple applications within a short period using slightly different details
• Avoiding exaggerating or inflating your income

During the credit check process, lenders have access to basic information such as your full name, address, and date of birth. If false information is provided, it is highly likely that it will be flagged in their system.

We understand that some declined borrowers may attempt to reapply numerous times, making slight modifications to their details in an effort to manipulate the system. However, this practice is likely to be detected, raising concerns and ultimately leading to a declined application.

It is always recommended to provide your genuine and accurate details without attempting to deceive or manipulate the truth.

The Lender is Unable to Provide Additional Loans

It’s really interesting and sometimes unexpected to know that the reason your application may be declined is because the lender doesn’t have the capacity to offer more loans at that time.

Keep in mind that lenders are businesses, not endless sources of funds. Some loan companies have a limit on the number of loans they can give out each month (for example, 100 or 5,000), or they may only have a certain amount of money available to lend (such as $1 million).

That’s why lenders may have different criteria depending on their goals or available funds for the month. You might be a great candidate, but the lender simply can’t fulfill any more loan requests at that time, or they might have strict requirements and only approve the absolute best customers.

It’s basically luck of the draw – you could be fortunate if you meet the lender’s requirements, or you could be rejected simply because they can’t provide additional funding.

To manage their loan distribution, loan companies may adjust their minimum credit score requirements, so you need to meet a certain level to get approved. Additionally, lenders may be more lenient at the beginning of the month and stricter towards the end as they try to meet their targets – or vice versa.

Do US States Differ in Strictness Regarding Payday Loans?

Indeed, this seems to be the case. While states like Texas and Nevada do not have any restrictions on the number of outstanding loans you can have, states like Ohio and Illinois will reject your application if you already have a payday loan.

It’s important to note that payday lending is not legal in certain states, including New York, Boston, and Nebraska.

What Should I Do If My Loan Application is Rejected? How Can I Increase My Chances of Approval?

Here are some helpful tips:

• Consider exploring alternative options like borrowing from loved ones or a credit union, as they offer low-cost solutions.
• Find ways to improve your credit score. Can you pay off any outstanding bills? Are there any unused credit cards or store cards that you can close?
• Reach out to the lender and ask for feedback on why your application was declined.

Here’s what you should avoid:

• Avoid repeatedly applying for loans as it won’t enhance your chances of approval.
• Do not provide false information to manipulate the lender’s system. Their technology is highly sophisticated and can quickly detect discrepancies.
• Using someone else’s personal information to apply is not recommended as the lender can easily identify this.

Another option to consider is utilizing a loans connection service like Pachyy. We connect you with over 30 lenders, matching you with the most likely one to approve your loan. Our lender panel is regularly updated to include those actively funding and accepting new applications. With no upfront fees, we are dedicated to helping you secure the funds you need. To begin, you can apply here >>