Loan denied: why does it happen and what to do?

The notification of loan denied arrived and brought you the classic feeling of discouragement and doubt about the reasons?

This situation can really cause doubts, after all, can the bank deny credit for no apparent reason? Why does it happen?

In today’s content we will explain this scenario to you, and we will also help you increase your chances of getting approved in a new attempt. Continue reading!

Loan denied: can the bank refuse credit for no reason?

You separated all the documents, made sure your name was clean, made the request carefully, but, after 3 days of analysis, you were surprised to receive the notification of loan denied. Is this right?

Before anything else, it is important to clarify the doubt: after all, can the bank deny credit for no apparent reason?

And yes, the bank can refuse credit for no reason, as it is under no obligation to grant loans to anyone. However, unreasonable denials are not common.

The fact is that if your credit was denied, it is likely that your profile was rejected in some more specific analysis stage. 

This is because not always having a clean name and submitting all documents is a guarantee of approval, as there are other analyzes besides these. 

So, yes, the bank can deny credit for no reason, but this is not common, and if this happened to you, it is likely that your profile was blocked at some stage of the complete credit analysis.

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Main reasons for being denied a loan

At this point you already know that the bank can deny credit for no apparent reason, as it is under no obligation to grant credit to anyone.

But, we also saw that there is always a reason for refusal, and the reason is not always obvious. See below the main reasons for having a loan denied by the bank.

1. Default 

The first and main reason for having a loan denied by the bank is default, and even the smallest and oldest debts can impact this issue.

The simple fact that you have already had a debt, even if it has already been paid off, may be a reason for the bank to refuse credit to you.

This is because the history of default impacts your credit profile for a long period, so, even if everything is up to date, it may take some time to regain the confidence of the financial market.

2. Insufficient relationship with the bank 

Banks give priority in granting loans to customers with stable and long-standing relationships. 

So, if you don’t have a bank account and tried to apply for a loan right away, this could result in a refusal from the bank.

This is because the financial institution does not have enough history to guarantee that your profile is safe, so it may deny credit for prevention.

Can the bank give credit to those who are not account holders? Yes, but the chances of having the loan denied are greater than for those who have an account.

3. Problems proving income 

Informal or old proof of residence are classic reasons for having a loan denied, because the bank will always give preference to customers who convey more security.

Therefore, when presenting this type of proof, prefer payslips or income tax receipts, as this increases your chances of approval.

It is worth saying that these are not the only models accepted, but they are certainly the ones that guarantee the bank the most security, therefore increasing the chances of a positive analysis.

4. Too many loans in the name 

If you already have other loans or financing in your name, this is likely to be the reason for the loan being denied.

This is because banks consider a safety margin in your income for spending on financial credits.

So, if you already have other credit contracts, it is likely that your margin is already compromised, so granting another contract poses risks to the bank.

This doesn’t always happen, but the fact is that the more contracts you have, the lower your chances of getting new ones, since the bank does not want to take the risk of not receiving payments. 

Can I apply again after being denied a loan?

In general, immediately after being denied a loan it is not possible to request it again, but even if it were, the result would probably be the same.

This is because the bank analyzes your financial history in the credit analysis, and this does not change from one day to the next.

Therefore, it is recommended that you wait at least 90 days before trying a credit agreement again with the same bank.

However, you can seek an agreement with other banks, as each financial institution has its own rules for granting credit.

In any case, try to organize your financial life before trying a new credit proposal, as this way the chances of obtaining approval are much greater.

Previously we presented you with 5 possible reasons for being denied credit, check which ones fit your situation and resolve them before seeking a new loan.

Read too: 6 healthy habits that help you have a better financial life – Analytic New.

Roberta 24 de January de 2025