What to Do If You Can't Get a Loan

A loan can be a helpful tool when you have an emergency expense. However, as most of us know, getting a loan can be tough if you don’t have the best credit or a decent income. And things are not getting easier, a Federal Reserve survey found that the rejection rate for credit applicants increased to 21.8% at an annualized rate in June 2023.1 The good news is that there are several strategies you can use to increase your chances of getting approval, including looking at bad credit loans. Continue reading to learn more about accessing a loan. 

What Impacts Loan Approval for Most Major Loans?

There are several things about a loan that will impact your eligibility. Before you try and find a solution for what you can do to get a loan, it will be important to understand the different factors lenders look at for approval. 

This information will help you determine what areas you need to work on. Here are some factors a standard lender looks at when approving applicants for a loan: 

Your Credit Score

Your credit score is a three-digit number based on a few different models—a FICO score and VantageScore are the most popular. This score provides anyone who checks it with a quick snapshot of your financial habits. This includes things like how much debt you have, your payment habits, the types of credit you have, and how much available credit you have. For most loans, your credit score is one of the largest factors that will influence your ability to get a loan. And so, with a bad credit score, eligibility may be challenging. 

Your Income

Lenders will also look at your income to determine whether their loan will be manageable for you. Every lender wants to ensure that they will get their money back along with interest to make a profit, so income will be a large factor. 

Your Ability to Repay the Loan

And finally, your ability to repay your loan will also be taken into consideration. Your ability to repay will encompass your income and your different expenses. Lenders will use these factors to determine whether you will realistically be able to make payments on the loan. Getting a loan may be challenging if you have a lot of debt and bills, as most of your income probably goes toward these expenses.

Things You Can Do To Get a Loan

If you don’t have the best credit or the most income, then you may be wondering how you can improve your chances of getting approval for a loan. Here are some things you can do to help improve your chances of getting a loan: 

Improving Your Credit Score

As mentioned above, your credit score is key when it comes to getting a loan. Additionally, having good credit will mean a lower interest rate and more flexibility with regard to repayment. And so, improving your credit will be extremely helpful. You could see an improvement in as little as 30 to 45 days depending on specific action steps.2 Here are some tips: 

Make Your Payments on Time

Your payment history will be the most important factor that affects your credit. And so, it is essential to ensure that you make your bill payments on time. In some cases, payment to your creditors will be reported to all three credit bureaus, and so even missing a single payment will be harmful to your credit history.

Get All Your Bills Reported

Not having any credit accounts can be harmful to your credit just as much as bad credit. One way to build credit without taking out new debt is to get existing bills reported. There are all kinds of bills that most of us pay on time each month, rent, phone bills, utilities, etc. However, these are likely not reported to major credit bureaus. The good news is that there are all kinds of services that can report those payments for you. Experian Boost is one example. 

Diversify Your Credit Portfolio

Your credit mix is another variable that will impact your credit; it measures the different types of accounts that you have. Having only one kind of credit account as a part of your credit history may indicate that you don’t have a ton of experience handling credit accounts. While a diverse credit mix may indicate that you can juggle multiple debt types. And so, having a diverse credit mix is pretty important—of course, you also want manageable debt. 

Keep Your Credit Utilization Low

Your credit utilization measures the amount of debt you have in relation to the amount of available credit. Having this factor over 30% can harm your credit score, so it is important to keep that in mind. Credit card debt can be especially impactful for your credit utilization ratio.

Limit Applying for New Accounts

When you apply for new credit, lenders will usually conduct a hard credit check. A hard credit check will bring down a credit score by a few points, so if you are trying to improve your credit scores, try and space out these inquiries. 

Keep Your Old Credit Accounts Open

Some credit accounts, like personal loans, will automatically be closed once they are paid back. Other accounts, like credit cards or revolving accounts, will remain open. It is crucial to keep them that way because closing them can hurt your credit score—as it lowers your available credit. 

Pay Off Your Debt

Paying off debt will be extremely helpful with your credit score in several different ways, including your debt-to-income ratio. You can use all kinds of debt repayment strategies to pay off debt; the avalanche method, snowball method, debt consolidation, etc. Do some research to find a debt repayment strategy that works best for you. 

Check Your Credit Reports Often

Another thing you should do to prevent a low credit score is to get your credit reports and check them often. Mistakes on your credit report can happen all the time, and if you don’t catch and correct them, then it could mean having bad credit without being at fault! Once those mistakes are corrected, that should bring up your credit scores.

Making Sure To Show All Income

Because income is such a large part of getting a loan, it is important to ensure that you show your lender all your income sources. Because if you don’t, you could miss out on a loan. Documents that you can use to show income can include things like:

DocumentDescriptionCommon Issuer/Provider
PaystubsA record of an employee’s earnings and deductions for a specific pay period.Employers
InvoicesAn itemized statement of goods or services provided with amounts owed.Service providers, Retailers
Bank account statementsA record of all transactions in a bank account over a set period (typically monthly).Banks or Financial Institutions
Letter of incomeA letter confirming the income of an individual, usually signed by an employer or institution.Employers or Income-paying Institutions

Some mistakes people make when showing their lender income are excluding passive income sources or income beyond a full-time job. Add all those things to your loan application to increase your chances of approval. 

Increasing Your Income

If you aren’t getting approved for a loan because your income is low, then consider getting a side gig or making a career change. Although this may not be the most practical option for everyone, if you do have some extra time and resources, there are various strategies to supplement your income for a noticeable increase. Even a small amount of extra income can make the difference between approval and denial of a loan. 

Adding a Cosigner or Co-Borrower to the Loan Application

A cosigner or co-borrower is a third party, usually a close friend or family member, with good credit and income. You can add them to your loan application to potentially increase your chances of getting loan approval. Essentially they will be the backup for the lender if you cannot repay your loan. With a cosigner, they’ll usually only be responsible for making payments on the loan if you do not. 

When adding another person to your loan, one thing to keep in mind is that, in addition to the responsibility that the other person is planning on taking, your actions will directly affect their credit. And so, it is imperative to make sure you can afford a loan before adding another person to it. 

Finding the Right Lender

The right lender will make a world of difference in whether you can get a loan or not. A bank, credit union, or other traditional lenders may be tougher on eligibility requirements when you are trying to borrow money and base it strictly on your credit file. However, online lenders may offer more flexibility, so if you have a low credit score, you may want to start with them. 

Loan Options That Are Flexible

Here are four different kinds of loan options that provide flexibility with approval even if you don’t have the best credit:

Personal Loan Options

A personal loan is one of the most versatile loan options available and is a good choice for unexpected expenses. Personal loan lenders can be found at institutions like banks and credit unions, or you can look at private lenders in person or online. Even with bad credit, you may be able to get funding through a personal loan. Here are some qualities of a personal loan that make them so popular:

  • Personal Loans Provide Flexibility — A personal loan can be used for a wide variety of purposes, unlike auto loans or mortgages, which are restricted to specific uses. Whether it’s consolidating debt, medical bills or home renovations, a personal loan can offer a lot of flexibility.
  • Simple Application Process — With the rise of online lenders, applying for a personal loan has become a fast and straightforward process. Some platforms provide instant loan decisions and quick disbursal of funds.
  • Debt Consolidation — Many people take out a personal loan to consolidate and pay off high-interest debts, such as credit card balances. By doing this, they can potentially pay off their debt faster.
  • Competitive Interest Rates — Depending on a borrower’s credit score and financial history, a personal loan can come with competitive interest rates.

Secured Loan

Secured loans involve collateral, which means more security for the lender. And so, borrowers may be able to get a loan despite low credit and income. Just make sure to do some research on the loan type you are applying for. 

Secured Credit Cards

Secured credit cards require a deposit for use. Borrowers don’t have to worry about making payments for secured credit cards since they pay for their credit line upfront. This makes them very different from other forms of credit card debt.

Credit Builder Loans

Credit builder loans are a great option for borrowers who are trying to establish a credit history. Although these may not work well for an immediate emergency, credit builder loans can be a good way to improve credit for access to other loan options in the future. 

FAQS About Getting a Loan

Why can’t I get a loan even though I’ve never missed monthly payments?

While it’s great that you’re diligent about your payments, approval depends on various factors. Your debt-to-income ratio and the overall health of your credit report can influence a lender’s decision. If you’re unsure, you might want to pull your credit report from one of the three major credit reporting agencies or another credit reference agency to review any potential discrepancies.

I’ve been denied personal loans due to my credit score. What are other borrowing options for me?

If traditional personal loan lenders have denied your application due to a poor credit score, you might consider payday alternative loans from credit union options, which tend to have more lenient lending criteria. Another option is secured loans, which require collateral. However, be wary of payday lenders, as they often have exorbitant interest rates and can lead to a cycle of debt.

How does a credit score differ from a credit history?

Your credit score is a numerical representation of your creditworthiness, influenced by factors like payment history and debt-to-income ratio. On the other hand, your credit history is a record of your credit accounts, payment history, and other credit-related activities. Both are crucial for approval, as they provide lenders a snapshot of your financial habits.

Why does my interest rate differ from a friend who borrowed money at the same time?

Interest rates are determined by individual financial profiles. If your friend has a better credit score or a healthier debt-to-income ratio, they might secure a lower interest rate. Factors from your credit file, like your payment history or any negative remarks, can also influence the rate you’re offered.

Can I improve my chances of loan application approval at a credit union if I’ve had a history of a poor credit rating?

Yes, many credit unions offer products designed to help members rebuild their credit. Joining a federal credit union and taking advantage of these products while ensuring you maintain a positive payment history and address negative factors in your credit history can enhance your chances of future approval.

How often should I check my credit reports from the three major credit bureaus?

It’s a good practice to review your reports at least annually. Regularly checking ensures that you catch any inaccuracies or fraudulent activities early on. Remember, a healthy credit report is key to approval, especially if you’re looking to borrow money in the future.

Some Cautionary Advice From CreditNinja 

When looking for easy approval loan options, you may likely come across payday loans (sometimes payday loans are called no credit check loans or cash advance loans) and title loans. These loans both come with extremely high costs and can lead to a cycle of debt. Fortunately, there are all kinds of title loan and payday loan alternatives that you can choose from including a loan from CreditNinja. 


  1. Borrowers are getting rejected for loans at the highest rate in 5 years | Yahoo News
  2. How Long Does It Take (and Tips) to Improve Your Credit Score? | TIME
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