What To Do When Your Bank Says No

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Having debts is nothing unusual – we Australians on average have 1.5 times our incomes in outstanding debt. Managing debt is a major preoccupation for many of us, but what happens when a major debt solution, debt consolidation, is not available to you because your bank says no and rejects your application?

It can feel like you’re out of options when your bank says no. You might be left scrambling to decide what to do next. Luckily, there are steps you can take to help your financial situation. If you find yourself with a credit rejection, don’t let yourself get disheartened. You can still take action to create a better future for yourself and your family.

Why Do Banks Say No?

It can seem like a continuous, frustrating loop. You want to get on top of your debt and combine everything into one payment. Yet, because you’re struggling with high interest rates and unaffordable payments, the banks keep declining your debt consolidation applications and your credit file score is being affected every time you try.

It can help to know why banks often say no to credit applications. These reasons might bring clarity to your situation and help you realise what to do next.

  • Too much debt – There is such a thing as too much debt. If your debt-to-income ratio is out of sync, this might make lenders less likely to give you more credit. In this case, it could help to clarify with your lender that you plan to use this line of credit to consolidate existing debt.
  • Your income – Saying you can afford a new loan isn’t enough. You need to prove this to your lender, and this is usually determined based on your current income. You’ll need to make sure your loan application is in line with your income.
  • Your credit score – Finally, your credit score can affect your ability to secure any lending. If you have a low credit score, you might want to look into alternatives for debt consolidation.

Do any of these situations above stand out to you? If you’re struggling with any of these common reasons banks say now, you still have options. When in doubt, talk to our debt specialist who can put you on the right path to success.

Steps to Take After Your Bank Says No

If you’re experiencing a no from your bank, don’t panic. It’s time to review your next steps so you can create a plan of action that works for you. Follow these steps below if your credit application has been rejected:

  • Review the reason why – Many banks will help you understand why your loan wasn’t accepted. This is usually included in your formal rejection, but you can also ask the bank directly. It will most likely be one of the 3 reasons outlined above.
  • Consider a new bank – While you shouldn’t go on an application spree, there might be other banks willing to work with you. Look into debt consolidation options specifically for people in your financial situation. Many banks have different applications for consolidation loans, for example, compared to other types of loans. However, beware of predatory lending that might prey on those who are in difficult circumstances.
  • Make a new budget – Budgeting is always important, but it’s essential when you’re in a tricky financial spot. If you’re struggling to afford your current payments, create a new budget to account for your new spending needs.
  • Talk to your existing lenders – It’s a good idea to talk to any existing lenders about their own assistance programs. Many offer programs or initiatives to help ease your financial burden short-term.
  • Look into alternatives – Finally, look into a debt consolidation alternative that might be a better fit for your situation. You may not even be aware of the other debt solutions available to you such as debt agreements and informal payment arrangements.

While debt consolidation may help you to consolidate credit card debt and other debts into one payment and the interest is generally lower than a card or personal loan, it’s important to remember that the debt may be paid off for longer over the life of the new loan.

You also have to understand that some debt consolidation lenders may charge more in application fees and interest than your current bank and that’s partly because the risk for them is greater when applicants don’t meet the usual bank criteria for a loan.

While there are lenders who will consider your circumstances as an individual. You have to weigh up whether refinancing will be worth it in your particular situation. You don’t want to put yourself in a situation where you consolidate your debts and it doesn’t fix the problem and the cycle starts all over again and turns into what is commonly referred to as a debt spiral or debt trap. The reality is that debt consolidation isn’t right for everyone.

Help Consolidating Your Debt

If the bank says no, there is still hope. The issue of debt has ties to your emotional and personal well-being and can become too much of a burden to shoulder by yourself. But getting financial advice from debt consolidation experts means you don’t have to go it alone, especially after your bank says no.

Debt Busters sees the positive side of every situation – there is always hope, and there are always solutions.

With our help, you might be able to consolidate your debts or choose another debt solution. For example, after an obligation-free consultation with us, together we might work out that a debt agreement will be the best option for you to win back your financial freedom. With Debt Busters, you can take positive actions to manage your finances.

Banks tend to see your financial situation in black and white. For example, if you missed loan payments, you’re therefore a bad credit risk. What you need is someone who understands that things are not always so simple, someone with the experience and knowledge to see the possibilities in everyone’s financial situation.

We know that everyone is different. We’ll take the time to get to know you, understand your challenges and treat you as an individual.

If your bank says no, contact us today for an obligation-free chat, it’s private and confidential and could be the first step in building a brighter financial future for yourself. Fill in the contact form below to arrange for us to call you, start a web chat or give us a call now on 1300 368 322. We’re here to help!

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Debt Busters is an Australian owned business which was founded in 2005 - since then we have been able to help thousands regain financial control.

Debt Busters prides itself on providing a dedicated Client Service Manager to work closer with you and provide a higher level of customised service about your situation.