Why loan or credit card applications may be declined
Understanding why applications are declined can help you identify the steps to take to qualify in the future.
We understand applying for a loan is an important step toward achieving your financial goals, so we carefully review every application. If we cannot offer the amount you requested, we may propose a different loan amount or solution that supports your financial well-being.
Please know that when we have to decline a loan application or propose a lower amount, this decision is made thoughtfully with your financial well-being in mind. These decisions are designed to ensure responsible lending for our membership and our Credit Union.
We evaluate all UNFCU loan and credit card applications equally, based on several factors. If your application is declined, we cite the specific reason in our loan declination notice.
Top reasons for declined applications
What it means
A loan you had with a creditor was not paid as per the agreed terms. As a result, the creditor transferred the loan to a collection agency and/or took legal action to collect the debt.
Steps you can take
- Refer back to the adverse action notice we sent you. This notice lists which credit bureau’s report we used to make a decision on your application. You can contact the credit bureau directly to review your information:
- If the information on your credit report is accurate, try negotiating with the collection agency or the creditor to settle your accounts. You can then work to rebuild your credit by making on-time payments and reducing your credit utilization. You can also consider a secured loan or secured credit card to rebuild your credit.
- If the information is inaccurate, dispute any errors with the credit bureau.
- If your credit history improves, you can reapply.
What it means
A review of your loan payment history, including UNFCU loan payments, shows late or overdue payments.
Steps you can take
- Catch up on any overdue accounts as soon as possible.
- Maintain consistent, on-time payments on all current bills and debts.
- Check your credit report to ensure everything is accurate. If you find errors, dispute them.
- If your credit history improves, you can reapply.
What it means
Based on your current income, we deem it will be difficult for you to repay your existing loan obligations.
Steps you can take
- Pay down the balances on your existing loans and credit cards.
- Avoid new debt or opening new credit accounts.
- Consider reapplying with a co-borrower who has a strong credit profile. Your co-borrower must be a UNFCU member at the time of the application and share household expenses with you. Their name will appear on the loan documents and they will have an equal obligation to repay the debt.
- If your loan balances decrease or your income increases, you can reapply.
What it means
Your current income does not qualify you for the loan amount you requested.
Steps you can take
- Consider reapplying with a co-borrower who has income and a strong credit profile. Your co-borrower must be a UNFCU member at the time of the application and share household expenses with you. Their name will appear on the loan documents and they will have an equal obligation to repay the debt.
What it means
You currently do not meet one or more of our eligibility requirements for unsecured loans. For more information, view FAQs about loan eligibility.
Steps you can take
- If you have sufficient funds in your UNFCU accounts, consider a secured loan or secured credit card:
- You can borrow up to 100% of the available balance in your UNFCU savings account or share certificate for a secured loan.
- You can borrow up to 100% of the available balance in your UNFCU savings or checking account for a secured credit card.
- The loan or credit card is secured by these funds, which are held until the amount borrowed is fully repaid.
What it means
Certain factors indicate that you are taking on too much debt. These factors include the number of loan requests and inquiries you have made in the past 12 months. The total balance of your existing loans may also be a factor.
Steps you can take
- Stop applying for new credit for a time to let the impact of inquiries lessen on your credit profile. Inquiries affect your credit score for 12 months, but are visible for 24 months.
What it means
The amount of credit that you requested was higher than the maximum amount we established. We set lending limits based on a number of factors including:
- UN contract type
- Length of employment
- Income
- Existing loans
- Other expenses
- Loan payment history
- Length of UNFCU membership
- Country of employment
- Currency of income
These factors and lending limits are subject to change at any time.
Steps you can take
- You may consider reapplying if any of these circumstances improve — for example, if you receive an extended employment contract, a promotion, or a salary increase. You can also explore a secured loan or secured credit card.
What it means
A secured loan or secured credit card uses money in your UNFCU deposit accounts as collateral. Your application will be denied if you have less than the amount you request in your savings account or share certificate account.
Steps you can take
- Deposit more funds into your account until you have enough to secure the loan, or
- Request a smaller amount equal to or less than what you currently have on deposit.
What it means
The proof of employment you provided shows that you have been in your current position for only a short time.
Steps you can take
- Consider reapplying once you can show 6–12 months of continuous employment.
What it means
To qualify for unsecured loans or lines of credit, members who joined via UNA-USA or KI USA must be a member for 12 months. Those with a UNFCU mortgage may qualify for a reduced time requirement.
Steps you can take
- You can apply for a fully secured loan, secured credit card, or secured line of credit at any time.