Why is credit not given and how to find out the reason.

The credit system in any country can become an assistant for the citizen. However, often this tool can be lost, and one may not even understand what happened. A common inquiry from clients is "how to find out why I am not getting a loan" or "how to find out why my loan is not approved". Often this element of communication disappears irretrievably. 

In general, it's important for all clients to understand why a loan is not provided. After all, there may arise a need to quickly arrange a loan agreement, and finding out why the bank is not providing a loan might be too late then. Additionally, understanding why banks deny loans is useful for the credit rating (which is also an important tool). 

Why are banks not issuing loans now and why are they not granting a loan to a specific client? 

Usually, loans are not approved for a number of reasons: old debts, insufficient documents, large requests. The reason can also be quite specific, which is why one should find out why with an explanation for all the reasons. Only in this way will it be possible to avoid many problems in the future. 

In recent years, banks have tightened conditions for borrowers, which is linked to the unstable economic situation, inflation, and the growing number of insolvent clients. The war and the complicated situation in the country as a whole have affected bank loyalty. 

If we talk about standard reasons for loan denial, they are: 

1. One of the main factors influencing the bank's decision is the borrower's credit rating. In Ukraine, this indicator is formed based on the credit history: the presence of delays, unpaid debts, and current obligations. If the client has had problems with loan repayments in the past, the likelihood of obtaining a new loan significantly decreases. That is, the credit history is very important. 

2. Low income. Banks carefully assess the income level of potential borrowers. If the income is not high enough to cover the monthly payments on the loan, the bank may refuse to issue the loan. The level of income is very important in the case of a high credit limit. 

3. Payment delays, participation in legal disputes over financial issues, or the presence of unpaid loans in the past can negatively affect the bank's decision. Even if all the loans are paid back after that, claims may still arise from the bank many years later. Therefore, it is better to return any loans without violating the rules. 

4. Errors in completing the loan application can lead to denial. For example, if you provided incorrect income information or forgot to submit all the necessary documents, the bank may reject the application.

5. Banks may refuse to grant a loan based on the client's age. Most often, loans are not issued to individuals under 21 or over 65 years of age. Age limits depend on the specific bank's policy. Lending to minors is prohibited by law. 

6. If a client frequently applies for loans at different banks within a short period, this may raise suspicions among creditors. Banks may interpret this as a sign of financial difficulties. In other words, even paying off loans, but frequently using them can become a reason. 

Another reason why a loan may be denied is the lack of any history of receiving and repaying loans. If the borrower has no credit history, the bank cannot assess their creditworthiness and may deny the loan. In such cases, it is recommended to first arrange small loans or credit cards to build a positive credit history.

How to understand why a loan was denied?

If a client is denied a loan, they should immediately figure out where the error occurred. First of all, they should contact the bank where the refusal was received. This can be done through a bank branch (in Ukraine, most banks have many branches) or online (for example, through an app). However, not all banks disclose specific details, citing privacy policies. 

There is also an option to check the credit history through a special bureau. This will help identify delays or other issues that might have caused the loan denial.In 2024, many banks offer online services for checking credit ratings. Such services can immediately show the reason for the denial and suggest possible solutions to the problem. Some financial platforms provide information on which factors in your profile need improvement. This is quite a simple option, but often it is difficult to get all the answers to your questions through websites. 

There is also an option to get a consultation at a credit organization. Many credit organizations and financial consultants offer services for analyzing loan applications. They can help determine why the bank denied the loan and provide recommendations for improving your credit profile.