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What to Do If You’re Declined

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When you've been declined for a personal loan, first of all, don’t despair. You’re not alone—and there is a path forward.

Actually, there is a lot you can do to improve your odds of being approved for a personal loan the next time you try. It might take a little time and effort (maybe more than you’d like) but you can set yourself up for success with these 5 important steps.

5 things you can do right now if you were declined for a personal loan

1. Review your decline notice.

The very first thing you should do is understand why you were declined for a personal loan. Any lender who denies loan approval is required to send an adverse action notice. It should list the reason(s) your application was declined. If you were turned down because of something on your credit report, this notice will tell you what in your credit report led to the decline, and the name of the credit bureau that reported the information. Because of the decline, you are eligible to receive a free copy of your credit report.

2. Review your credit report.

Once you receive your credit report, it is important that you review it thoroughly. Check your report for errors and be prepared to dispute any inaccuracies. For example, it’s possible someone else’s account information could have been included in your report. Or, if you filed for bankruptcy in the past, be sure your report does not include accounts that have already been discharged. And always be on the lookout for any signs of identity theft.

If your report seems accurate, it could be that your credit score is too low, for one of these reasons:

  • Payment history: Have you missed any payments within the last two years?
  • Debt-to-income ratio (DTI): Are your credit balances high compared to your income?
  • Credit utilization: Are your cards close to their maximum limits?
  • Lack of credit history: Do you have too few or no past credit accounts?
  • Recent inquiries: Have you been applying for credit a lot recently?

3. Tackle your credit troubles.

If you need to fix a few things with your credit, it's better to tackle them one at a time to make it more manageable.

  • If you’ve missed payments, be sure to get caught up, and continue making on-time payments. Late payments can stay on your credit file for up to 7 years.
  • Pay down your debts as quickly as possible to lower your DTI and total credit utilization.
  • Remember, it’s not just total credit utilization that matters: Bring it below 30 percent for each account.
  • If you just don’t have enough credit history, you have several options. Consider becoming an authorized user on the account of a spouse or parent who has good credit. Make sure the account you sign onto has a good payment history—the older the account, the better. You may be able to qualify for a secured credit card, which lets you put down a deposit and borrow against it. Your timely payments on a secured account become a part of your credit file.

4. Monitor your progress.

You are entitled to a free copy of your credit report once a year from each credit bureau (Experian, TransUnion, and Equifax), but those reports are updated monthly. If you sign up for credit monitoring, you can keep close tabs on how your credit score is doing. Plus, you’ll be alerted if there’s suspicious activity on your account, which is always a good thing.

5. Check your rate again.

When the factors affecting your credit score—and your credit score itself—have improved, it’s time to check your rate again. Checking your rate through LendingClub is a soft credit inquiry and won’t impact your score. Consider asking for a smaller personal loan. If you can’t get approved for a loan to consolidate your credit card debt, it might still save you a lot of money if you pay off your highest-interest credit card.

What members have to say

Many LendingClub members were declined on their first try. But they didn’t give up, and neither should you. As you can see, a lot of factors play into whether or not you are approved for a loan. We’re here to help you make the journey to better financial health. Here are a few inspiring stories from some of our members who didn’t give up:


“My need for debt consolidation came about as a result of a difficult personal situation, and my profession and work structure is not typical. LendingClub was not able to get me approved about 9 months ago, but they did provide me with some advice and an invitation to reapply after 6 months. After taking the advice and keeping on plan…they closely reexamined my atypical conditions. Their professional and thorough process has made it possible for me to put difficult times in the rearview mirror.” Jim, a member from Texas

“The first time I was so hurt when my loan was not approved. Then I got an email saying try again, so I did. Got a call a couple days later saying…you are approved. I can’t explain the joy of now being back in control.”
Ava, a member from Florida

“The first time I applied, I was denied because I was not in a position to handle a loan. A few months down the line, I re-applied and was approved for a number of different loans (varying amounts, different lengths of time, and slightly different interest rates/APR). I chose the one that was best for me. In a few days, I had my loan! I consolidated my credit card debt, and now I can afford to buy a car in a few months, and down the line, to save for a down-payment on a house.” Kearston, a member from Pennsylvania

See more member reviews.

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