Number of online loan rejections increase, but why?
The number of people in the UK using the Internet to source personal loans has rocketed, and according to new studies, the trend is responsible for a record amount of rejections.
According to a credible financial resource site, around 1.4 million people have had loan applications rejected in the last 7 months. They claim that this level of declination could be harmful to peoples credit scores, reducing their overall chances of attaining finance further down the line. It is suggested that the volume of rejected applications is being fuelled by the availability of online loans, with over 30% of brokers offering this service.
Although the claim is statistically accurate, its content shouldn’t deter people from applying online. There are a few points you should consider: -
- Although the number of declinations has increased, it is important to realise that the number of people actually applying for loans online has also increased, (in fact it’s fast becoming the most popular way to apply). Therefore, as dictated by the law of averages if more people are submitting applications using this method, then the amount of people declined via this method will also increase, albeit proportionately.
- It is estimated that over 10 million people apply for loans online every year. According to the report around ¼ of those people will be rejected. Over 40% of the populous have debt issues and suffer from impaired credit, and by definition will find sourcing a loan difficult.
- Applying for loans online is no different from physically walking into a branch or making a phone call; the only exception being that it can be more convenient and also allows you to do a little more research before you apply.
If you’re considering applying for a loan, regardless as to how you intend to do it, it is important to have a slight understanding of your personal credit profile beforehand. If you have had credit in the past and have defaulted on payments or had county court judgements issued against you, the likelihood of being rejected for a loan is increased.
If you are considering applying online it may be worth checking that the site will not credit check you directly, if you would prefer not to be. Any loan site that credit checks you directly must clearly state its intention to do so. Many brokers are able to give you a decision in principle and will advise you if they can help, without a credit check. www.loan.co.uk offer a prime example of this service, and of course so do we.
