What Can You Do If You Get Denied for A Lån or Loan?

When there is uncertainty in an economic landscape, lenders tend to take a second look at applications to ensure borrowers can repay the loan balance without difficulty. That’s especially true with personal lending products.

These are uten sikkerhet or loans that don’t require security or collateral. That means the borrower doesn’t need to put up a valuable asset to secure the funds, like their home or an auto. If the client defaults, this could place a greater risk on the loan provider.

The providers emphasize creditworthiness and financial status more if inflation is rising substantially and a recession is predicted. In fact, it can prove tricky to qualify, though many people turn to personal loans when facing financial hardship.

While it can prove frustrating to apply for a loan product and be denied, you should not call yourself out without trying to make some improvements and try again. There are a few methods you can try to reapply and possibly get approved the second time.

Let’s review what lenders look for in a challenging landscape and what you can do to comply to get approved.

How Can You Get Approved After Being Denied For A Loan The First Time?

Lenders have specific criteria they look for when approving an unsecured personal loan, primarily creditworthiness. When a borrower can present with an excellent credit score, this speaks to the lender that repaying the balance won’t be difficult for this client.

When an economy is unstable, loan providers expect exceptional credit and financial standing when reviewing loan applications for the best rates and terms. Go to https://living-in-norway.com/loan-in-norway/ to learn about loans in Norway.

Documents are scrutinized more thoroughly to mitigate risk heightening the criteria for whether a borrower will be approved and under what terms. Some factors considered include:

The credit profile.

The credit history and score are the primary factors of whether a loan will be approved or rejected. Those with exceptional scores will receive the lowest rates. Usually, individuals with less-than-favorable scores will get a higher rate, but in an uncertain economy, these have the potential to be denied.

Scores can range from “300 to 850.” The priority for a loan provider is that you can repay the loan balance without a struggle. When looking at the credit history, the lending agency wants to see a pattern of on-time repayments. Any negative marks or defaults will play against the possibility of approval.

Before formally applying, you can save a hard credit pull by reviewing your credit history to see where it stands. You’ll be able to tell the likelihood of approval based on the reports and your score.

The debt

The debt-to-income ratio is probably a little more disconcerting for the loan provider even than the credit. If you’re inundated with debt more so than the income you bring in, that tells the provider you won’t be able to afford another repayment added to your monthly expenditures.

The DTI is the percentage of funds that leave the household for debt expenses vs. the income you bring into the home. Lenders rely on this ratio to determine your ability to repay the loan. The favored percentage is below 35 percent, but the least possible, the better.

Anything above that is an indication that you have too great of debt consuming your income. The ideal scenario before accumulating more would be to either pay down some of your bills or increase your income level.

The income level.

There is often a minimum income level most lending agencies expect for borrowers when taking a loan. This needs to be shown in documentation with either W2s, pay stubs, or some form of proof that this is, in fact, your pay grade. In addition, steady, consistent employment of roughly two years is essential.

A lender prefers to avoid clients with gaps in their work history, particularly if these are extensive. These can be times when the individual either chose not to work or was on a laid-off status. In either situation, there was likely no steady stream of income.

If that were to happen again or is a recurring situation, the loan repayment would be a struggle to maintain unless the individual is independently wealthy. That would be a whole other investigation process.


A secured personal loan is not typical, but these are somewhat easier for borrowers to obtain. A secured loan is when you place a valuable asset to secure the funds you are borrowing. That means if you default on the loan, the lending agency can sell your assets to recover its loss.

Sometimes, a client will use a personal loan to pay for a house or an auto, using these as collateral. The loans are risky for the borrower if there is a default with the potential for losing their home or car.

That makes it imperative to consider whether you will be able to repay the debt, especially in a tough economy, before using your house or auto as security against it. In a worst-case scenario, the bank will foreclose the house or sell the vehicle to recover its loss if the repayments stop.

In the current landscape, the ideal option is to take your chances on approval or rejection with an unsecured product. With a denial, you can always find out why you were rejected, make improvements, and try again. But you will not lose valuable assets.

Also Read: How Can Small Loans Help Address Personal Problems?

What Are Some Reasons Personal Loans Are Being Rejected

Lenders have a few reasons for turning borrowers’ applications down. Some you can readily update and resubmit, like missing documentation, while others take more time to remedy, like poor credit. Let us review.

The application is not thoroughly filled in.

If you have missing information on your application or documents are omitted, the loan will be rejected for this simple reason. A fast, easy fix is to double-check the paperwork turned in to ensure each area was completed and determine if the lender needed something more.

You can then readily reapply with a chance of approval based on providing all the pertinent information requested for the first time.

Steady income needs to be documented.

The application will be rejected if the lender isn’t satisfied with the proof you provide of your income level. The priority is that the loan provider believes you can repay the balance fully without struggling. If that’s not the case, you will be denied.

Sometimes lenders prefer tax returns to get a better overview of the details they want to see. You can cover all bases by providing payment stubs, W2s, and tax returns to avoid delays or, worse, a rejection.

Creditworthiness and debt

As mentioned earlier, the lender wants to see that you can repay the debt. If you already have a high debt accumulation, it’s difficult for a provider to see how you could repay an additional expense.

In that same vein, a less-than-favorable credit score with a history of delayed or missed repayments also speaks of challenges in responsibly managing finances.

Each scenario would cause a lender to avoid the risk of approving this loan.

Before making a second attempt at applying, many improvements would need to be made, including paying off debt and doing so consistently on time. Click here for guidance on personal loan programs in Norway.

Final Thought

When an application is denied, a lender is required, according to the “Equal Credit Opportunity Act,” to disclose why you were rejected for the loan as long as the inquiring is done timely, “within 60 days of the rejection.”

This is referred to as an “adverse action notice,” allowing a borrower the opportunity to make corrections so that they can possibly receive approval with their next application. A denial is not a refusal. It is possible to turn it around.

Also Read: Learn More About The Documents Required For Business Loans

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