Are you struggling to get an emergency loan? There are reasons for being turned down for emergency loans. The Financial Conduct Authority (FCA) has been tightening regulations for payday lenders which means lenders of emergency loans have to check any potential customer very carefully. The FCA’s rules do not apply only to lenders of emergency loans but to the financial services sector as a whole.
Here are a few of the reasons you may be turned down for an emergency loan. Strange as it may seem, you can be turned down for a loan because you are good with your finances:
Perhaps you have not borrowed money from a financial institution before
You may find it strange that you are penalised for not borrowing money! This may apply to you if you are applying for an emergency loan, a short-term loan, a payday loan or a credit card. It could also be a problem if you are trying to get a mortgage or any other loan. One would believe that if we have not had to borrow money in the past we are good at managing our finances. Not borrowing money should mean we are saving carefully and we are, therefore, able to buy with cash. All this is probably true but the problem is that we are not building a credit history. All financial institutions want to know how well you manage your debt and if you have no history they have nothing to go on.
If you have no credit history it may be a good idea to borrow a little money and then pay it off in good time. Paying off a loan in good time will build provenance. Remember that utility companies, banks and other financial institutions share customer details so you have a good chance of getting a positive credit history.
Too many searches on your credit report
If you apply to many different lenders there may be too many searches on your credit report. When you apply to a lender for a loan the lender will search your credit report to check your credit history. Each time a lender searches, there will be evidence of the search. Other lenders will see the search history and become wary, assuming you are trying to get a loan from many different lenders. Take care when you are applying for an emergency loan, do not apply to many different financial institutions for the loan.
Do you fit the profile of the lender?
Lenders of emergency loans and other loans have ways of calculating who they want to lend money to. Some lenders may be targeting a certain age bracket or a certain social-economic target group. Generally, emergency lenders do not limit profile groups.
Have you had financial problems in the past?
If you have a bad financial track record you can expect to be turned down for an emergency loan, this is obvious. It will take three years to clear a bad credit history so it is important to pay back loans on time. Most registered lenders will not give loans to people with a bad credit history.