Getting a Personal Loan Declined: How to Apply Again (Part 1)

When your request for personal credit is declined, you might wonder why this has happened. Beyond that, you might also wonder if there are ways for you to apply again.

You must note that credit cards and bills are not portable. You shouldn’t keep trying to strike it with your shots; you won’t be successful. Your credit score will decrease as you file more loan applications quickly, making it appear riskier for lenders to lend you money. As a result, you should consider this if you were denied a personal loan or credit card.

Read on to discover how to apply again for a personal loan after being declined.

First, Learn the Reasoning behind the Credit Denial

The credit report is a valuable resource in this process. free of charge each year from each Canadian credit agency. You should check your credit report to find out why you were rejected for financing. The details on your account may indicate a past-due account or an excessive number of late payments on another account. On your credit report, there might be fraudulent behaviour or unrecognised collections. Your credit score may be poor. To determine if this is the situation, look at the summary.

The following are the most typical explanations for credit application rejections:

  • Low Credit Score

It is incredible how many people have no idea how their credit scores are doing. Many people don’t examine their credit reports, and this is probably because they don’t want to be disappointed. On the other hand, a Canadian citizen is entitled to a free copy of their credit report from each of the three main bureaus once a year. It might turn out to be worse than you thought, but seeing it in black and white will encourage you to work on raising your credit score.

  • Lack of Credit

Younger borrowers frequently start with credit cards, but loans offer a completely distinct experience. Your credit rating may be zero if you have never obtained a debt. Credit counsellors are unable to examine your previous credit history. You can resolve this issue by taking credit-building training or obtaining a credit card from your bank.

  • Bankruptcy

Credit agencies usually retain bankruptcy-related information for six to seven years. It is a factor that lenders may consider when deciding whether to grant you a loan. You might have trouble obtaining a credit approval if you filed for bankruptcy within the last seven years. At this juncture, waiting is the only option.

  • Consumer Proposal

Similar to bankruptcies, consumer concepts usually have a three-year lifespan.

  • Derogs

An adverse effect on a credit history is late payments. Pay your bills and credit card balances on time to avoid having late payments appear on your credit record for up to six years. Having a number of negative marks on your credit report can make it challenging to get a loan.

  • High-DTI

The debt-to-income ratio (DTI) measures how much debt an individual has in comparison to their income. To be eligible for credit with little risk, your DTI must be 43%. Prospective lenders cannot be certain that you will be able to make payments on new credit products on top of your current commitments if your DTI is too high. You can only reduce your DTI by paying off some of your current debt or by significantly raising your income.

  • Low Income

Lenders must confirm your income in order to ensure repayment. Speak to the financiers whose criteria you already meet to learn more about what “sufficient” means.


Applying for a personal loan may come in times of need. However, applying for loans may not be easy if you present some of the reasons we have stated above. To find ways to apply again for a personal loan after being declined, stay tuned for the second part of this series.

Are you looking for personal loans? 365 Loans Canada is here to give you access to financial solutions for whatever you need. Contact us today to learn more! 

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