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What to Do If You’re Declined


Stories from real customers

“LendingClub was very easy to work with. The first time I applied, I requested too large of an amount, but they encouraged me to try again. So I requested a smaller amount to pay off one credit card, and was approved. Now, my monthly payment will be lower, the credit card is paid off which improves my credit score, and I am very happy with LendingClub.” —Mary, a member from Hawaii

“Honestly didn't get approved on my first loan. I wasn't very happy about that receiving that email saying that I was declined because I work hard to keep my credit in line. But I received another email and I went online to input all my information and BAM approved. LendingClub worked very hard to get me approved. I recommend LendingClub and will continue to do business with them.” —Jeffrey, a member from Oklahoma

“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 after getting an e-mail from LendingClub to apply again. I 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

If you've been declined, you're not alone—and there is a path forward

In fact, there’s actually quite a bit you can do to increase your chances for a loan if you were initially declined.

Here are some tips for how you can set yourself up for success for a new loan application when you’re ready (remember: applying for a loan with LendingClub doesn’t hurt your credit).

One thing to know before you get started—increasing your chances for a loan might not always be as quick as you might like.

Know your reasons for being declined

The very first thing you should do is review the reason(s) you weren’t approved for a loan. Once you know that, you’ll know how to fix it.

If you haven’t already reviewed the reasons for your decline on your Adverse Action Notice, you can either log in to view it or check your email for instructions from LendingClub on how to get it.

The Adverse Action reasons can seem complicated, but they often come down to four reasons. The most common reasons people are declined for a loan through LendingClub are:

  • Not enough credit history: If you have less than 3 years of credit, it will be hard for many financial companies to give you a loan.
  • Debt to income ratio (DTI): Too much of your income could be tied up paying off debt at any given moment. Generally, you should aim to have a DTI (debt to income) ratio of below 30%. Find out more.
  • Credit use is too high: Simply stated, if this is the reason for a decline, you’re using more of your available credit than lenders like to see. This might seem counter-intuitive: if you have a $5,000 credit limit, what’s wrong with using all of it? For better or worse, high credit utilization raises questions for many creditors. Find out more.
  • Delinquent payments: This one’s simple, too: A creditor has reported you late on a payment. Unfortunately, if one company says you were late paying them, it makes other companies less likely to give you a loan.

There are many other reasons a person could be declined for a loan. If you see a reason not mentioned above, some online research can help you understand what it means and why it might have appeared on your credit profile.

Here are 5 things you can do now:

1. Sign up for credit monitoring

There are many companies offering free access to your credit score, credit history, and advice for how to improve them. At Credit Karma, you can check your credit score for free.

Spend some time reviewing your individual credit history to understand its strengths and weaknesses. Most of the time, the credit service you use will give you guidelines like total credit used or maximum hard credit inquiries in the past. We have a few tips for you, too!

2. Make a plan

Most people are declined for multiple reasons, not just one. Credit factors tend to be related to each other both in good times and bad. For instance, if you hit a rough patch, it might mean you need to use your credit cards more. That can increase both your debt-to-income ratio and your credit utilization at the same time.

If you need to fix a few things with your credit, you can tackle them one at a time to make things more manageable. One of the fastest ways to improve your credit is to focus on your DTI. If that already looks good, look at your credit usage. After those, you should refer to the reasons on your Adverse Action notice to see where other weaknesses may lie.

Some of the reasons you were declined might take a few years to fall off your credit history. That’s why the next step might be to:

3. Give yourself plenty of time

Repairing or building credit can take months or even years. Try not to pile unrealistic expectations on your shoulders by thinking there is a quick fix. It usually takes 30 days for your credit reports to change substantially even in the very best case, since most creditors report payments only once a month. Most of the time it takes months of slow and steady progress to make meaningful changes.

Examine your credit history to see how long ago negative marks appeared. Based on how recent they were, you’ll be able to estimate how long it might take.

Hard credit inquiries usually drop off your credit history after two years, so those tend to resolve faster. If you have delinquent payments, it could take years for them to stop hurting your credit score (remember: LendingClub does a soft credit pull which doesn’t impact your credit).

4. Focus on the positives

Even if you have delinquencies or a bankruptcy in your recent past, you can improve your chances of getting a loan by managing your credit responsibly from now on.

  • Keep your debt-to-income ratio as low as possible
  • Pay your bills on time and in full
  • Use your credit cards sparingly
  • You can’t control what happened in the past, but you can control your future actions.

5. Check your rate

Once you feel like your credit has improved, go ahead and check your rate with LendingClub. If the results aren’t what you hoped, start back at the top of this article and work your way down. We know you’ll be able to do this with enough time and a little hard work!

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