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So your loan application got rejected. Here’s what you do next.

A rejected loan application can cause anxiety, embarrassment, and insecurity. However, you have to keep in mind that the lender’s decision not to grant your loan is nothing personal. It is not a reflection of your worth as a human being. At most, it may be a reflection of your current capacity to pay– as perceived by lending institutions.

This is why it’s essential to determine the exact reason why your application got rejected. Here are some of the most common reasons loans get rejected and the appropriate remedies for each:

Problem #1: Incomplete/insufficient requirements

Lenders require documents pertaining to your identity and financial situation so they can properly assess your capacity to pay. Therefore, insufficient requirements are a major red flag that will almost always land your application straight to the ‘Reject’ bin.


Check the list of requirements your bank or financial institution gave you. Prepare each one, even the optional or additional ones, just in case. Make sure all IDs and documents are valid and updated.

Problem #2: Low credit score

Having a good credit score is critical when applying for a loan, since it reflects how responsible you are with payments. The rule of thumb is simple: the higher your credit score, the higher your chances of securing a loan.


Settle all your bills on time, and never default on your payments. Remember that the bank needs assurance that you will respect your due dates once you are granted a loan. If you have a credit card, work on improving your credit score by not charging more than you can pay.

Problem #3: Lack of guarantee that you can pay back

Depending on the type of loan, you may be asked to present either a collateral, a loan guarantee, or both. If you don’t own any properties or there are no bills assigned to your name, the lender might think twice about granting your loan.


Don’t reapply immediately after your first application gets rejected. Take the time to review and improve your financial standing so that you can have better chances when you do reapply.

Problem #4: Unreasonable loan amount

It is highly possible that you are actually eligible for a loan, just not as big as the amount you applied for. 


A third of your monthly salary would be a good ballpark figure for the loan amount you could qualify for. A lot of other factors might come into play, but reducing your loan amount would be a good start to improving your chances.

Final tip: Pick a lender wisely

There are lenders who prioritize small business owners, while others prioritize teachers. Bottomline: your loan may have been rejected simply because you are not the target market of your chosen lender. Next time, check the background of the lender to make sure you are a good fit.

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