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7 reasons you can't get a loan

[Dec 23, 2010.]

 

You've tried more than once to get a personal loan and you just can't understand why you aren't getting approved. Even if you think you're the perfect candidate for a loan, there may be some things you haven't thought about. Here are seven reasons you may be having trouble getting a personal loan.



  1. You took advantage of the get-a-15-percent-discount offer and opened a new credit card at your favorite retailer. Applying for that store card could cause your credit score to plummet as much as 52 points, according to a WalletPop article.

  2. You ran up your credit card balance. Running up your balance can drop your score up to 68 points.

  3. You have a lot of small debts that have not been paid. Even if you've forgotten about them a collection agency may not have. For instance, some cities turn over batches of unpaid parking tickets and library late fees to collection agencies after a certain period of time has passed, according to Smart Money.

  4. Too many inquiries have been made into your credit history. A credit inquiry can occur with your knowledge, such as when you apply for a loan, or without your knowledge, such as when you rent a car. Many people don't think about the effect that inquiries by utilities, insurers, car rental firms, and other agencies may have on their credit score. Unsolicited inquiries usually don't impact your score, but if you authorize a credit check it can.

  5. Bad timing of your credit checks. Shopping for a loan from several lenders will likely result in more than one credit check. Try not to let too much time lapse between inquiries so that it doesn't look like you are attempting to apply for multiple loans.

  6. You co-signed on a loan. Think twice before letting a friend or relative--even your kid--talk you into becoming a co-signer. If they stop making payments, the responsibility falls on your shoulders.

  7. You have too much debt. Your debt-to-income ratio is a key piece of information that lenders look at anytime you apply for loans. Having too much debt may signal that you are at risk of defaulting at any time.


Clean up your act


It's important to make yourself as attractive a candidate as possible when you apply for a loan. Spend time cleaning up your credit problems before even approaching a lender. Also, think about the financial moves you have made recently, whether big or small, that could be keeping you from getting a loan.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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