I am a real estate investor, and internet marketer, a social media strategist, and many other things all under the umbrella of my consulting company called Agora Consulting, LLC. Not only have I’ve been fortunate to get a good amount of business funding for my real estate but I also get other businesses funded. During this time, I have seen many businesses get denied by the banks. Here are 3 reasons why you get denied for personal loans and business loans by the banks.
Recent Denials
If you have great credit and you’re able to get anything you want on the first try when apply for loans…FANTASTIC! What about when you get a denial? Better yet, what if you do not qualify for what you thought you would qualify for? Uh oh. Now we have problems. Whether you are trying to acquire business funding, or you need a recreational loan for something like paying off extra bills or you want a new boat, you will want to be strategic of how you go about this process.
Pull your own credit history and get educated about your own report before taking it to lending institutions. Most of the time, you should be able to take it to you desired location, and they should have a good idea of whether you may be approved or not. If they say no, you can take your credit report somewhere else where they accept your credit report. You do this so that “denials” are not placed on your credit history. Not only will this go down as a credit inquiry, but it will also create a denial.
Needless to say, banks do not like multiple denials in the course of a year. We have worked with many individuals where they worked hard to improve on their credit, and then they tried to apply for multiple high-profile credit cards. They got denied. Now they have to work on credit repair and they most likely will not be able to get any other type of loans for a number of months because they have so many denials in a period of a few weeks.
Prevent this from happening to you by pulling your own credit history. Then you take your own credit history and let the lending institutions, dealerships, banks, etc., give you an estimate of what they can do with it before blasting inquiries.
Late Payments
Late payments may sound like something that is self-explanatory, but many do not understand the actual affects that late payments have on their credit reports. Sometimes having 2 or more late payments on your credit history can make the difference of you receiving money or not. Lending institutions take this very seriously. If they cannot trust that you make payments on time, then they are hesitant to give you any money because they don’t want to spend the time OR money to come after you in the case that you do not want to make payments a loan.
Late payments generally, are not reported to the credit bureaus until 30 days AFTER the initial payment date is missed. This is not always the case as each company has different rules and guidelines, but as a general rule of thumb, you do not want to be more than 30 days late on your payments. Actually, you don’t want to be late on your payment at all!
If you’re thinking about being lazy and not making your payments on time or you’re scared to go to the mailbox because you’re in hardship and you do not want to see the amount that you owe on the bills, it is best to muster up as much courage as possible and take ownership of your bills. It hurts you more in the long term than what it does in the short term. If you have late payments, it normally sticks with you for at least 2 years.
Too Many Inquiries
There are too many clients out there who have no idea of the amount of inquiries that are on their report. This can be the very thing hindering you from getting you $50,000 or $150,000 that you’re seeking from the banking institutions. Even if you went in to get a car loan or a house loan, if you’re not careful, you may be unknowingly hurting your own chances to get the money you deserve.
There is nothing wrong with getting a car loan, a house loan, or any other type of loan for that matter. What you didn’t know is that as you go to these lending institutions and you inquiry of a loan, they will blast out inquiries to multiple other institutions to see who can provide the best rate. We are not just talking about 3-5 inquiries, but rather we are talking about up to 11 inquiries at one time. Did you know that?
So what does that mean for you? If you shop at 3 different dealerships and each one does a pre-approval process that blasts your credit report to 11 different places, that means that when it is all said and done, you will have a total of 33 inquiries on your credit report that you did not have before! From a bank’s standpoint, when they pull your credit report and they see all of those inquiries, they will be extremely hesitant to give you any loans whatsoever. They see this as you not being responsible with your credit, and thus you go to different lending situations and that is why you will be getting denied. No one is going to look at you in a positive way, and so they deny you.
There have been scenarios where individuals would have an 800 score, but they were still not able to get any loans because of this exact scenario. You are looked at as a risk unto the banks and they take the chance of you defaulting on the loan if you’re not responsible.
How do you combat this?
1) Make sure that when you trying to get a new loan, you make it known to your lending institutions that you only want up to 3 inquiries pulled. This minimizes the amount of inquiries that will show up on your credit report.
2) Dispute the inquiries on your credit reports in order to get them removed. Yes, they are on your credit report, but you can get them removed fairly quickly. When this happens, it does wanders and cleans up your credit profile. You’d be surprised how much your score will jump.
You can do this by going to websites such as creditchecktotal.com, pulling your credit report, and then using the “dispute” option that is made available to you within the online platform.
The Uneducated Consumer
We must educate ourselves in order to move this nation, let alone this world, forward. There is always an opportunity to learn something new, but first, responsibility must be taken.
I have an affiliation with a company named Aurelian Commercial Lending. Their missions is to help Fund America. With 40 years of experience and helping 100s of business-men and business-women to get funded. While working to get people funded, I have noticed the HUGE need of educating America as well.
I say all of that to say this…check your credit history often, and get familiar with how the banks think, in order to take advantage of it. The result is a successful credit profile where you will be able to leverage your credit as a tool in order to change the world. You wouldn’t believe the amount of people that I work with where we go over their credit history to get them funding, and there is all types of things that shouldn’t be on their credit report.
Don’t just trust that companies will be honest with your credit. We all know what happened in the Equifax breach, and that is supposed to be one of the most trusted companies to deal with your personal information. Let’s get educated together.
