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Your loan application was rejected, so what next? 

Whether you’re applying for a home, car, personal or business loan, it can be heartbreaking when you’re rejected. It can feel like a huge setback, especially if you’ve had your heart set on something significant. However, it’s important to remember that a rejection is not the end of the road but rather a detour. You can still get back on track and apply for another loan in the future. 

6 common reasons loans are rejected

There are many reasons why loan applications aren’t successful. Some of the most common reasons include: 

Bad credit: Bad credit is one of the most common reasons loan applications are rejected. If you have a low credit score or defaults you may be denied a loan. A bad credit score indicates to lenders that you could be a high-risk borrower. 

Your credit score is a numerical representation of your creditworthiness, influenced by factors like credit history, application frequency, and repayment behaviour. It usually ranges from zero to 1,200, with higher scores indicating better credit and greater lending possibilities at competitive rates.

Issues affecting your score include bankruptcies, court judgments, defaults, and credit infringements.  A good score usually falls between 800 and 1,200, granting easier access to loans and better interest rates. Scores between 300 and 500 are considered fair, while anything below 300 is considered bad credit and may cause your loan application to be rejected. 


Affordability: When considering your loan application, a lender needs to see that you can afford to make monthly repayments on time. You’ll need to have enough income to cover the repayments, as well as your other debts and obligations. If your application shows you can’t afford to make the repayments, they will reject your loan application.

Unreliable employment history: Having an unreliable employment history can also cause your loan to be rejected. Lenders want to see that you have a consistent income to make loan repayments.

Too many existing loans: If you already have too much debt via existing loans, your loan application may be denied as it could be difficult to keep up with multiple repayments to financial institutions. 

Incomplete application: If you leave out essential information on your application it may result in rejection. It’s important to provide all the right information, so the lender has a full understanding of your current situation. 

Lack of deposit: For home loans, not having enough of a deposit is another reason your application may be rejected. Most banks ask for a certain percentage to limit their exposure to risk. Most lenders will also require proof of savings for home loan applications.

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Okay, so what do you do once your loan application is rejected? 

While it may feel like a huge setback, there are a few things you can do to recover from this situation that may help you with future loan applications: 

Find out why your loan application was rejected

The first step to remedying this is to find out why the lender denied your application. It’s important to get the facts, so you can be better prepared in the future. Although, it’s important to remember that every lender has differing lending criteria, so just because you received a rejection from one, doesn’t mean another won’t approve it.

Once you know why your application was rejected, you can work to make changes. Perhaps you need to save money for a bigger deposit or stay longer in steady employment.

Credit repair with Fix My Credit

Reviewing your credit report is essential for identifying issues that may be negatively impacting your credit score. Many people face this situation and there’s often something you can do about it!

Credit repair companies, like Fix My Credit, can help you take steps to repair your credit. It involves identifying negative areas of your credit report and working through them. At Fix My Credit, we can help you with bad credit by providing a comprehensive view of your credit history and finding areas that need attention. 

We’ll address negative items on your credit report and we will assist you in finding solutions for debt management, negotiating and settling your debts and hopefully improving your financial situation. 

Our full credit repair services in Australia include: 

If you have improved your credit history,  you may have more of a chance of securing a loan in the near future. We’d recommend waiting 6 to 12 months before reapplying, as multiple applications in a short amount of time can negatively impact applications submitted with other lenders. 

Pay off your debts

Paying off your debts may help to improve the chance of your next loan application being approved. Not only will you save on interest, but you’ll show lenders that you’re capable of making repayments and will have less overall debt. Debt consolidation is another option that is suitable for some individuals.

While a loan rejection can come as a significant blow, there is a light at the end of the tunnel. If you understand the reasons for your rejection, seek help from credit repair experts like Fix My Credit and address your existing debt, you can pick yourself up and see that a rejection isn’t a dead end – it’s a chance to reinvent your current financial situation and work towards a more promising outcome next time. 

If you’ve had a loan application rejected and you would like to repair your credit, call the experts at Fix My Credit at 1300 785 214 or fill out an online enquiry form today. 

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