Refinancing a student loan is perhaps the best way to reduce the monthly payments on your student loan. Through refinancing, it becomes easy for you to improve your cash situation and at the same time, it also allows you to keep your finances healthy.
The only problem is you are not guaranteed to have your application for a student loan approved. This is because lenders want to be confident their money is safe when they lend to you. If you are thinking about applying for a student loan, then it makes sense for you to know the reasons why your student loan can be denied. This knowledge can help you improve your chances of getting a student loan.
A Low Credit Score
A low credit score is one of the main reasons for student loan denialyou may have to apply for registration loans in Phoenix instead. When you apply for refinancing, you are asking for a fresh loan. So, before the money is lent to you the refinance company needs to make sure their money is safe, and they mostly rely on the applicant’s credit score to know if the borrower can be trusted to repay the loan. If your credit score does not fall in the range of 660 or 680, then the lender will probably reject your application. A low credit score is one of the main reasons for student loan denial.
Take Remedial Steps
However, once you understand the student loan denial reasons, you can take steps to improve your chances of getting a student loan. One option available to you after being denied a student loan because of your poor credit score is to take measures to help improve your credit score.
Thus, it pays always to pay your credit card and loan on time. If you have other debts, then you need to ensure these are paid – either wholly or partly. It is also a good idea to visit AnnualCreditReports.com to look for errors in your credit report. If there is incorrect information present in your credit score, you need to have it corrected as it will go a long way in helping you improve your credit score.
Insufficient Income
Though lenders do not always require the borrower to have a good income, having an insufficient income is one of the student loan denial reasons that you need to be aware of. There is a possibility that your lender will require you to show you earn at least $24,000 annually.
Some may even require your income to be not less than $75,000 annually. If you are wondering, can you be denied a federal student loan because of insufficient income, then you must find out the eligibility criteria of each lender. The best option for borrowers who do not have the required income is to look for a lender that does not require you to have a minimum income.
Another option available to those who do not make enough is to get a second job or to start a side business that will boost their incomes and help them qualify for a student loan.
High income may not be enough
Even borrowers who can show a high income are not guaranteed their application for a student loan will be approved. The reason for this is lenders investigate how much you owe and what is the ratio of your debt to your income. If your debt to income ratio is at a certain level – typically, about 43 percent then this could be a reason your loan is denied.
Reduce Debt to Income Ratio
One way to get around this roadblock is to reduce your debt to income ratio. This is possible when you start paying off part or all your debt including that title loan near you in Phoenix, AZ. The sooner you pay off your credit card debt or other debts, the easier it becomes for you to have your application for a student loan accepted. Also, by earning more money, you can again convince the lender to approve your student loan. A monthly income of about $3,800 is usually enough to get a student loan.
Other common student loan denial reasons include not being able to prove you have enough assets to help repay the loan in case you become unemployed or are not able to repay your debt for some other reason. Thus, to prevent student loan denial, it makes sense for you to increase your savings and earn enough money to repay your debt.
Once you receive a student loan denial, the next step is for you to speak to the lender to ask them what were the student loan denial reasons. Sometimes, the reason may be as trivial as a wrong address, or it could be an incomplete application. These can easily be fixed, and they will ensure you receive your student loan.
