Why did my loan get denied with good credit?
If you had a recent bankruptcy, you recently applied for a lot of new credit, or you have some unpaid collections or legal judgments, then you can be denied even if your credit score is technically good enough to get a loan.
Large debt: You could be turned down if you have a high amount of existing debt even if you have an excellent credit score and no previous problems in repaying any of it.
It's possible to be turned down for a loan despite having good credit because the lender has established that you may not have the ability to repay. It's possible to be turned down for a loan despite having good credit because the lender has established that you may not have the ability to repay.
The CIBIL score is just one of the items on a credit report and is not the only factor that decides whether your loan application will get approved or not. Even if your CIBIL score is 750 there can be other reasons like any default on your loans, previous credit cards, any of the records showing settled or written off.
Having a high debt-to-income ratio — the amount of debt on credit cards, other loans or a mortgage compared with the amount you're paid — is another possible reason for loan denial. Also, a loan application could be declined for something simple like incorrect or missing information in your application.
When a lender accesses your credit report, a so-called hard inquiry is added to your reports. If your loan application is denied, the inquiry will remain, but the lender's decision will not appear on your credit reports. So, a declined loan will not appear on your credit report and won't directly impact your scores.
- Check your credit report for any errors and dispute them.
- Make your payments on time every time.
- Use the debt snowball or debt avalanche methods to pay off credit card debt.
- Wait for negative items to fall off your credit report.
One of the most common reasons people are rejected for a credit card — even people with good credit — is a high debt-to-income ratio. Age. If you're under 21, you'll face income requirements mandated by the federal government. Too eager for credit.
Some may approve loans for scores as low as 580 or even 300, but scores above 640 often secure the best terms. Keep in mind that your credit score isn't a single number but varies based on different scoring models and lender calculations. A higher score usually leads to better loan terms.
While lenders vary in their requirements, you're more likely to get the best loan terms if your score is in the "good" category or higher, meaning at least 670. 1 But even if you have only a "fair" score, which starts at 580, you may be able to obtain a personal loan from some lenders.
How rare is a 750 credit score?
| FICO® Score range | Percent within range |
|---|---|
| 650-699 | 12% |
| 700-749 | 17% |
| 750-799 | 24% |
| 800-850 | 23% |
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.
A 750 credit score is considered excellent on commonly used FICO and VantageScore scales, which range from 300 to 850. The exception is if you are new to credit because a high score isn't always enough. The length of your credit history and how much debt you carry relative to your income also matter.
You can still be denied, but only in rare circ*mstances, most of which will likely not apply to a first-time borrower. A borrower with a poor credit history or negative financial situations, such as bankruptcies or repossessions, will have a harder time getting approved for a loan—even with a good co-signer.
The bottom line is that a rejected loan does not affect your credit file in the long term. So instead of getting disheartened over loan rejections, you should focus on building a better credit history. Therefore, the first thing you should do is check your credit report for any recent inquiries.
Any score above 700 is generally seen as a good credit score, but many factors can affect this number. If your score is below 700, and your income isn't sufficient, you may be asked to get a cosigner.
A good credit score doesn't guarantee your application will be accepted. It's commonly believed that a credit score over 700 will get you approved for credit. While it may be true that a higher score typically raises your chances of scoring a new loan or credit card with a lower interest rate, approval isn't guaranteed ...
- Pre-qualify. Lenders weigh information differently, so while you may not meet the credit score requirement with one lender, you could qualify with another. ...
- Gather documents. ...
- Verify all information. ...
- Add a co-signer.
If you're denied, though, it doesn't have an additional impact beyond the initial inquiry. If you're unsure about whether you'll qualify for a loan and want to avoid a hard inquiry, consider lenders that offer prequalification.
If you're looking to reapply for a personal loan with the same lender that already denied your application, you will likely need to wait a while before submitting a new request. This time frame varies depending on the lender and may range from 30 days from the date of last application to up to six months.
How often are loans denied?
How Often Do Underwriters Deny Mortgage Loans? In 2022, 9.1% of applicants were denied a home-purchase loan, according to data collected under the Home Mortgage Disclosure Act. However, some loan programs have a higher denial rate than others.
I've been declined following a credit check, can I appeal this decision? Yes, you have 30 days from the date the outcome is known to raise your appeal.
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While you'll generally need good to excellent credit to get approved for a $30,000 personal loan, you might still be able to qualify even if you have poor or fair credit.
Credit score — Most personal loan lenders will review your credit history and score to determine how likely you are to repay the loan. The higher your credit score is, the better terms you'll qualify for. If you have a FICO Score of 670 or higher, you'll likely qualify for the best loan terms and interest rates.
