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What to Do if Your Personal Loan Application Is Denied

What to Do if Your Personal Loan Application Is Denied

By Melina Duffett • January 23, 2020

If you recently filled out a loan application, only to learn that you were denied, you’re not alone. Whether the personal loan application was with us at OneMain Financial, or another lender, there are a lot of factors that go into the loan application process. We understand that you may be feeling discouraged, but just because you received one rejection letter doesn’t mean you’ll be unable to get a loan. Let’s take a look at why you were denied a loan and learn what steps you can take to get approved.

Reasons for Loan Application Denial

There are a variety of different reasons that could have contributed to your loan application being denied, such as:

  • Incomplete or incorrect loan application information
  • Alert on your credit report
  • Insufficient income
  • High debt-to-income ratio
  • Lack of collateral

What to Do if Your Loan Application Is Denied

If any of those reasons were stated in your loan decision notice, then the good news is you have something to work with. First and foremost, go back and double-check to make sure your application was filled out correctly. You’d be surprised at how many times it’s as simple as forgetting an extra “0” on your income, providing monthly instead of annual income or not looking into the options for providing collateral.

If you’ve double-checked your loan application and everything was filled out correctly, but you were still denied, don’t be discouraged. You should also check your credit report for errors to ensure that there aren’t any accounts, charges or hard credit inquiries that you don’t recognize.

If both of those items look correct, then OneMain is happy to help, and we can review your loan rejection letter with you to see if there’s anything else we can offer. If you applied with another lender, you may find that different lenders will offer different terms than your original lender, and you could be approved for a personal loan with another company. Try using a loan comparison calculator to find the best personal loan for you.

Short-term Strategies to Increase the Likelihood of Getting Approved for a Personal Loan

  • Use Collateral If you were unwilling to provide collateral in your original rejected application, you may want to reconsider when you reapply — collateral is a great way to help secure the loan and makes you seem less risky to lenders.

  • Get a Creditworthy Cosigner If you were denied a loan because of your credit score and/or income, then you may want to reapply with a creditworthy cosigner. From the lender’s standpoint, loans with a cosigner are less risky because if you fail to make payments, they’ll have a backup point of contact. Some lenders, like OneMain Financial, do not allow cosigners, but may permit a co-borrower on the loan. If you decide to ask someone to help you sign for a loan, just be sure they’re aware of all the risks involved and reassure them that you will not miss any payments. Learn the difference between a cosigner and co-borrower and the pros and cons to each.

Long-Term Strategies to Get Approved for a Personal Loan

Just because you were rejected for a personal loan doesn’t mean the future isn’t bright. There are a lot of strategies you can put into place that, over time, will not only increase the likelihood you’ll get approved for a personal loan, but also improve your overall financial well-being.

  • Decrease Your Existing Debt If you currently have other outstanding loans or credit card debt, work on repaying them in order to decrease your debt-to-income ratio. Learn the best strategies for paying off debt.

  • Increase Your Income While this may seem easier said then done, there are a lot of ways to make extra money, or ask for a pay increase. This will also help decrease your debt-to-income ratio and increase your chance of getting approved for a loan.

  • Build Your Credit Getting approved for a personal loan will be easier in the future if you have a good credit score. Aside from always paying your bills on time, there are several ways to improve your credit score.

How Long Should You Wait to Apply for a Loan After Being Denied?

If you get rejected after applying for a loan, it's ok to go ahead and apply to 1-2 other lenders. But, you’ll want to avoid applying to too many within a short period of time — it could trigger a red flag. If you get rejected by those lenders too, it's best to work on the long-term strategies we mentioned, and then wait about 6 months to reapply.

You might also be wondering, “Does getting rejected for a loan hurt credit?” Well, the short answer is, not really. According to Experian, a hard inquiry into your credit knocks less than five points off your credit score, and that dip typically won’t last long.1 Your credit report will never indicate whether a loan application was denied, so getting rejected for a loan won’t significantly hurt your credit score. In fact, many lenders will allow you to see if you’re prequalified for a loan, which won’t impact your credit score at all.

Be Patient and Stay Positive

We understand that the loan application process can be difficult and sympathize with you if you’ve received a rejected application. We hope you’re able to put some of our short-term strategies into place in order to successfully apply for a loan. If you need to implement our long-term strategies, then please be patient, trust the process and stay positive.

At OneMain, we aim to work together to help you find not just any financial solution, but one that works for you.


The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.