Many people applying for a loan worry about this possibility, but it is actually a somewhat unusual occurrence. Lenders can usually adjust loan terms in many ways in order to help you qualify for a loan.

However, if you are denied, there are several steps you should take:

First, ask the lender for an explanation. They are required to tell you, in writing, exactly why your application was denied within thirty days. The most common reasons given are inadequate down payment, too much debt, and poor credit rating. All of these can be corrected with time however.

Second, ask for a review of the decision. It is possible you could still qualify if you can satisfy the reviewer that your credit was damaged by an isolated and unpredictable incident such as a major illness.

Finally, if the first lender still denies your application, go to another lender. Just because one lender feels you are not qualified for a loan doesn't mean they will all feel the same way. Different companies operate under different guidelines, and although you may pay higher rates, you should be able to find someone who is willing to offer you a loan.