It’s pretty disappointing when you’ve applied for a loan or a credit card and you get the alarming news that you have been denied.
You might be asking yourself, “Turned down? For what?” The good thing is that this is NOT the end of the world, and you have options to find out why your loan application was denied!
What NOT to Do When You Get Denied for a Loan
Going from place to place to fill out more applications for an approval will just make matters worse. This will only add inquiries to your report which will make your score even lower and build more frustration. Also, you may run into places that may lend you the money regardless of your credit, and this could take you down a long and difficult road.
Please do not resort to desperate measures such as “credit fixing” companies that charge you ridiculous fees. They can look very enticing if you want to “get out of debt fast” or find a quick fix, but we advise our members not to do this.
Beware!Check out this blog post on credit repair companies to learn more about them before even thinking of going to one!
What to Do When You Get Turned Down for a Loan
The first thing to do is ask the loan officer why you were denied. At Pelican, when we have to make that kind of decision, we do our best to explain why it was made. We also give suggestions on ways to improve your credit score through our Financial Wellness Program.
As a consumer, you are entitled to a free copy of your credit report through annualcreditreport.com. You can get a copy yourself or work with a certified credit counselor to look over it and decide what you should do next.
Here’s the thing: credit was made to be paid. What I’m saying is, if you have a debt or legitimate collections and/or charge offs, you want to pay or settle these items. Taking the approach of excessive disputing—or even worse, ignoring them—will prohibit you from being creditworthy and will not improve your situation.
Yes, when you settle on a debt, normally the collector will not delete the item, but it will at least be settled in full. This should improve your credit and help you move in the right direction. I refer to this as “unraveling.”
Picture yourself wrapped with crossed up yarn. It will take time and a strategy to unravel yourself and allow you to experience freedom. Notice that I said time and a strategy—NOT a quick fix! Credit is such a major and valuable component in a person’s life, so I’d strongly suggest managing it accordingly.
If you have fallen off the wagon in this area, you can still take the necessary and proper route of making improvements. That being said, you are just an email or phone call away from experiencing the life altering situation that you need with your credit.
How to Get on the Road to Loan Approval
One of our trained, certified, and full-time credit counselors are available to meet so that you can dig deeper into why you were denied. This is a free service available to Pelican members*, whereby you can obtain a clear and concise plan regarding becoming creditworthy and having total financial health.
The first part of this process will include your counselor going over your entire credit report with you and ensuring that you understand the details of the report. This could include paying off negative items, ensuring that there are no fraudulent items on your report, and knowing the best approach to starting a healthy credit history.
The benefit of taking this approach is being a part of the process and being aware of what it took to turn your situation around. This is a gratifying and empowering experience. Just know that this process takes the commitment on both you and the counselor’s part, and at the end it will be well worth the work!
In summary: Being turned down for a loan or credit card is not the end of the world—it’s the beginning of your improvement. So if this happens to you, the first question you need to have answered is… turned down for what?
*Pelican State CU membership required to take advantage of free credit counseling services. Visit pelicanstatecu.com/join to become a member. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law. Credit counseling is not intended to give you financial advice, but the financial education you need to make informed decisions. Results may vary. Pelican and its employees are not responsible for any claim, suit, action or damage resulting from credit counseling.
My name is Kimberly Gaines, and I’m certified through the National Association of Certified Credit Counselors and the Credit Union National Association. I possess over 20 years of financial experience of which 9 of those years at Pelican State CU. I have starred in several #AskPelican videos, where I answer financial questions for our members. Beyond this, I also dedicate time to teaching financial subjects at community workshops and in schools in Pelican’s branch communities.