What to Do When Your Loan Application is Declined

Having a loan application declined is never a good feeling, especially when the need for financing is urgent. In recent years, lenders have tightened their lending guidelines, making it more difficult for some applicants to get a loan approval when they need it. It can be a bit overwhelming knowing that a lender is not willing to offer you an affordable loan, but it is not the end of the road for most borrowers. Understanding why you were declined, what alternatives to conventional loans exist, and the specific steps you can take to prevent it from happening in the future are all beneficial in moving past the uncomfortable situation.

Know the Why

There are several reasons why a loan application may be declined, with the most common including problems with an applicant’s credit history. All conventional lenders take a close look at payment history, credit utilization, and other pertinent information detailed in a borrower’s credit report at the time an application is submitted. If there are any black marks, like a late payment or two, maxed out credit cards, or a court judgment or bankruptcy, a lender is likely to decline an application because the borrower poses too much of a risk. You may be aware of these warning signs to lenders before submitting an application, but in some cases, errors or new negative details have been added that you did not know about. In either case, it is important to check your credit report and history after a loan decline to pinpoint the problem – and then work toward fixing errors or black marks where possible.

Understand Your Options

A declined loan application is not the end-all to getting the financing you need. If you have assets you own outright, like a vehicle or other valuable personal belongings, you most likely qualify for a secured loan. But can you actually get a title loan in 10 minutes? A local car title lender may be a smart alternative when your need for financing is immediate and credit history is not in the best shape. You may also consider tapping into your available credit limit on a credit card as a temporary fix. Unsecured loans may offer a lower interest rate than these alternatives, but the higher cost of borrowing is often offset by the ease of qualifying for a different type of loan or cash advance.

In addition to alternative lenders, you may have the option to apply for an unsecured loan almost immediately with another conventional lender. Other banks or credit unions may have less stringent credit requirements or lower standards for proof of income. It is common for borrowers to shop around with similar lenders in order to get the financing they need, but approval is not always guaranteed after a loan decline.

Plan for the Next

The best thing you can do after a loan decline is understand where things went wrong and work toward correcting the issues. Lenders are often able to provide you with details as to why an application could not be approved, whether that be a lack of steady income, a credit blunder, or too many outstanding debt obligations. This information is powerful as it gives you direct marching orders to help prepare for your next loan application. So long as you are willing and able to put in the work to improve your credit, generate stable income, or pay down other debts, the next loan application process is more likely to lead to an approval.

5 Things You Should Do When You Get a Raise

5 Things You Should Do When You Get a RaiseYou’ve worked hard, taken on extra responsibilities, and made sure to shine at every aspect of your job. It’s finally paid off and your boss let you know that you’ve been approved for the raise you’ve wanted for months. Your first instinct may be to start dreaming of all the things you can do with your money, but don’t rush out and sign a lease on a brand new car just yet. Naturally you want to enjoy your extra money, but you also don’t want to spend it so fast you hardly notice you ever got a raise. Instead do these things.

Review your tax withholding. Your raise might push you into a new bracket. Use the IRS’s online withholding calculator to see how much should be withheld from your paycheck based on your salary and exemptions. If you need to make changes, complete a new Form W-4 and give it to the right person in payroll or human resources. Otherwise, if you don’t adjust your withholding, you could end up with a tax bill when you file next year’s income tax return.

Don’t count your eggs just yet. A 5% raise might not really look like 5% on your paycheck, especially if you’ve had to adjust your tax withholding. Wait until you get your first paycheck so you can see how your pay really increased post-raise. Once you have a concrete idea of how your raise affects your take-home pay, then it’s safe to start making plans for your money.

Be careful about taking on extra expenses. A few extra hundred dollars in your paychecks makes you feel like you can say yes to anything. Premium cable channels? Go right ahead. Spa subscription? Why not? Another extracurricular for the kids? It will keep them busy. Watch out for lifestyle inflation, which can easily happen as you make more money. If you start taking on new expenses quickly, the extra money from your raise will be gone before you ever really get a chance to just enjoy having more money in your paycheck.

Increase your savings. Rather than spending your salary increase on more “things,” your raise will benefit you much more if you divert it to savings. If you’re comfortably living on your current salary, you won’t miss the extra money if you put it in your savings account. You can build up your emergency fund, maximize your retirement savings, or put money towards a summer vacation. You don’t have to put all the salary increase in your savings – you can split it 50-50 with another goal.

Use the extra money to pay off your debt. Move beyond minimum payments by putting some extra money towards your debt payments. Start by paying as much as you can towards your highest rate credit card and continue until all your cards are paid off. If you don’t have any credit card debt, consider putting extra payments toward your mortgage or car loan to pay these off ahead of time. Make sure you won’t face any prepayment penalties by paying before the scheduled date.

It may be awhile before you get another raise so maintain some financial freedom by avoiding too many new financial obligations.

Figuring Out Frequency – When To Trade

Many factors can make or break an investment. For example, how often you trade is essential to a profitable portfolio. Trading too often or too rarely can lead to missed opportunities or poor returns. The perfect frequency is whatever will lead to the greatest margin of profitability. For most traders, this approach means holding on to an investment for as long as possible. However, this plan will vary depending on the investment type, your personal strategy, and more. Consider the following four factors to help you decide how often you should be trading.

The Type of Investment

Investing

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Different types of investments call for different strategies for trade frequency. New traders will have their hands full, as plenty of research will be necessary before further exploring options such as day trading, binary options, and the plethora of other investment products available.

For example, day traders will need to decide whether they prefer to make a handful of trades before the markets open or if they plan to make decisions as new data becomes available throughout the day. On the other hand, binary trading options — investments based on whether a certain asset will be higher or lower than its current value by a set time — will need a totally different approach and skill set.

Your Specific Approach

How much risk can you tolerate as an investor? Your personality will largely help you decide what is a proper amount of daily trades for you. For example, a methodical investor will have low risk tolerance and will avoid snap decisions. Those who can tolerate greater risk, however, have more flexibility to jump on new opportunities as they arise. Note that investment type and individual personality work in tandem; a conservative day trader will use a totally different strategy than a spontaneous day trader.

Your Investment Strategy

In general, investments that stay frozen longer net better returns; you’ll likely want to sell as rarely as possible. However, you’ll need to define which market signals are worth an investment to decide how often you should buy.

Avoid hard minimum and maximum trade numbers. Instead, aim to make the correct amount of trades; don’t lock yourself into an arbitrary quota. You need to understand how and why you will trade and how to get out of a bad trade if needed. Define, practice, and stick to your strategy. Only make trades that fit your criteria.

Your Due Diligence

The market is full of unreliable, misleading, and inaccurate data. Plus, convenient modern technology makes it incredibly easy to trade as much as you want. These two factors combined may lead to the temptation to make a quick change when you hear about a market fluctuation. Patience is important, and not only for long-term investors. Short positions, binary options, and all other trades require that you stay patient, not make decisions impulsively, and rely on the knowledge you’ve gained through careful, comprehensive research.

If you’re beginning as an investor or you’re taking an interest in a new approach, find a strategy that accommodates your preferences and goals and test it before committing. Strike a careful balance between knowing the precise moment to trade and when to walk away by considering the above factors.

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