Nobody likes getting turned down for a loan. And although Greater Pittsburgh FCU makes every effort to approve all loan requests, it's sometimes necessary to deny an application to protect the applicant's financial health, as well as the credit union's.

When the credit union denies a loan, it's because the applicant has either (1) a poor credit history, or (2) a high debt-to-income ratio. Your debt-to-income ratio is the percentage of your total debt compared to income. For example, if each month you pay $400 toward debt with a $1,000 gross (before tax) monthly income, your debt-to-income ratio is 40%.

Although there's no magic ratio to shoot for, a rough guideline is that total debt shouldn't exceed about 40% of total income. The credit union also weighs other factors, and requirements vary for different loans.

If your loan request gets rejected, here are a few things you can do to improve your chances for approval on your next application:

* Devise a plan to pay off old loans, including credit card balances, thus reducing your debt-to-income ratio.

* You may qualify to consolidate your loans and credit card balances into one loan at Greater Pittsburgh FCU; then stop overusing credit cards.  This would bring your debt-to-income ratio down if you qualify.

 

* Get a handle on your budget by comparing what you spend with what you earn. A budget can help you trim expenses and funnel money toward paying off old debts.

* Fix your broken credit history. If you are denied for a loan, you are entitled to a free copy of your credit report as stated in your denial letter.  You are also able to view your credit reports for free once a year - we recommend www.annualcreditreport.com.  We would be happy to help you read your reports and point out trouble spots, if you have any questions.  

* Bolster your income with a second job - even temporarily - to help trim your debt.