Financial entities deny a loan when your profile does not meet the minimum requirements that they establish to grant a loan. We have a lot of experience helping thousands of people get portfolio purchases and consolidations without affecting their credit history, so we know very closely what those minimum requirements are.
If you are denied credit, you will find one or more reasons why this happened in this guide. We will also show you what you can do to reapply and choose an entity that is more likely to approve your loan.
Let's do it!
What is the minimum score to be approved for credit?
If you want to check your credit history, check out the following two videos in which we explain how to do it:
Remember also that if you do not want to check your credit history online, you can also do it physically or through a petition right.
If you have less than 700 points, it does not mean that your credit applications will always be rejected; it means that you must make sure that all the following 4 steps comply with the bank's requirements. Otherwise, most likely, a good part of them will deny a loan.
What are query footprints, and why are they important?
An inquiry fingerprint is a record that is kept in your credit history whenever an entity consults your credit score. These records do not negatively affect the score, but any entity can see what other entities have been interested in your profile.
If you have requested a loan more than four or five times in the last three months, we recommend that you wait at least a month before requesting your loan again so that the traces are erased, and you return with a better probability of approval to request it.
The use of your rotating quotas
The second most common reason why financial institutions deny a loan is the level of use of:
These credits have something in common: they are a permanent and open line of credit, which you can use again as you pay.
However, when you have several credit cards or several revolving credits, and you have them full; that is, when you have already consumed more than 70% of the quota, banks believe that the risk level of lending you money is higher and, therefore, they will avoid lending you money.
Consequently, we recommend that when you go to apply for a loan, you try to use the quota of your credit cards -and similar- to be less than 60% to have a better chance of approval of your loan.
In addition to the credit history, the query traces, and the used quota of your revolving credits, some banks ask for minimum monthly income to approve a loan. Clearly, this is not a factor that you can modify like the previous two.
However, knowing clearly what is income that you can show monthly will allow you to better choose the financial institution from which you are going to request the loan.
If your income is between 2 and 4 minimum wages, it may be a good idea to go to the banks with the largest number of clients in the country or those who recently became banks.
If your income exceeds four minimum wages, you could approach almost any entity to request a loan - as long as the other requirements that we discuss in this guide are correct. Otherwise, it would also be a good idea to look for the newer banks or your Family Compensation Fund - if you have an employment contract.
Your level of debt
All the other criteria on this list may be fine but still, deny you credit. Why? Because of your level of debt.
The level of indebtedness shows how much debt you can assume before getting into financial trouble. There are many ways to calculate it, but here we will give you a very easy one:
Add up the total of everything you owe to financial entities. Now divide that value by your monthly income. If the result is greater than 10, a credit institution may think twice before approving your application.
The final reason why entities deny a loan is because of your level of spending and obligations. If you have filled out credit applications, you will have seen that they ask you about your monthly expenses in many. Also, they ask you for the number of financial dependents you have.