Loan declined: what are my options?

If you’ve just had a loan rejected in the UK, you’re not alone. It can feel frustrating, especially if you’re relying on that money to cover essential costs or to consolidate debt. But before you apply again, it’s worth understanding why it might have happened and what your next steps should be.

Whether you’ve been refused a loan for the first time or it keeps happening, this guide will walk you through the common reasons behind declined applications, the risks of reapplying too quickly, and safer alternatives if you can’t get a loan.

Why do I keep getting rejected for a loan?

Lenders don’t always give a reason, but most loan rejections boil down to a few key factors:

1. Poor credit history

If you’ve missed repayments, defaulted on past loans, or have a County Court Judgment (CCJ) against you, lenders may see you as a higher risk.

2. Low income or affordability concerns
If the lender thinks you might struggle to make repayments based on your income and existing commitments, they may decline your application.

3. High existing debt
Already owe money on credit cards, loans, or overdrafts? A new loan could tip the balance, so some lenders will hold back.

4. Too many recent applications
Multiple credit applications in a short space of time can signal financial instability and harm your credit score.

5. Mistakes in your application
Something as simple as a typo or inconsistent address history can cause delays or rejections.

Getting refused a loan might feel like a dead end – but it doesn’t have to be. The important thing is to avoid panicking or rushing into another application straight away.

I can’t get a loan – what next?

Each time you apply for credit, a ‘hard search’ is recorded on your credit file. Too many in a short period can lower your score even further. So, if you can’t get a loan and you’re wondering what to do next, your best move is to pause and review your options.

If you do still want or need to borrow in the future, here’s what can help:

• Check your credit report for errors or outdated information. You can view your report for free through services like Experian, Equifax or TransUnion.
• Register on the electoral roll. It helps confirm your identity and address.
• Pay at least the minimum on all debts each month to start rebuilding your credit history.
• Avoid multiple credit applications in quick succession.

Improving your credit score can take time, but small changes do add up.

When money’s tight, it’s tempting to turn to high-cost options, but some routes can make things worse:

• Payday loans or doorstep lenders might seem convenient, but they come with extremely high interest rates.
• Using credit cards to cover essentials can spiral into further debt if you can’t clear the balance.
• Borrowing from friends or family may strain relationships if things go wrong.

If you’re struggling to keep up with existing debt, borrowing more might not be the answer.

What are my options?

If your loan was declined and you’re not sure where to turn, there are sensible and more sustainable options to explore.

1. Speak to a professional debt adviser
At MoneyPlus, we offer confidential, non-judgmental support to help you create a realistic budget and explore your options. Depending on your situation, you may be eligible for a structured debt solution such as:

• A Debt Management Plan (DMP) – allows you to make one affordable monthly payment to your creditors.
• An Individual Voluntary Arrangement (IVA) – a legally binding agreement where you repay a portion of your debt over time, and the remaining debts in the IVA are potentially written off at the end.

2. Review all your debts and prioritise
If your debts are mainly non-priority (like credit cards or personal loans), you may be able to negotiate payment plans directly with lenders. 

3. Consider a credit union
Unlike commercial lenders, credit unions often offer fairer rates and are more likely to consider your situation if you’ve had past credit issues. They’re not for everyone, but they can be a safer borrowing option.

Sometimes, the most helpful step isn’t to borrow more – it’s to get a better grip on your finances as they are. That might mean:

• Creating a realistic monthly budget
• Cutting back where you can
• Speaking to a debt adviser for support.

It may not feel like it right now, but having your loan application declined could be the prompt that helps you take back control.

If you’re regularly using credit to cover basics, or struggling to keep up with repayments, don’t wait for things to get worse. Get tailored support before missed payments start to affect your credit score or lead to legal action.

How MoneyPlus can help

Being refused a loan isn’t the end of the road. It’s a signal that something in your financial picture needs attention. By taking a step back, reviewing your options, and getting the right advice, you can put together a plan that works – without putting yourself at risk.

At MoneyPlus, we’ve helped thousands of people in similar situations find manageable ways to deal with debt. You can also visit MoneyHelper for free, impartial advice.

Need support? Contact us to talk through your options.