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How to Appeal a Loan Denial in Canada and Get Approved on Your Next Try

Sep 4, 2023 | Car Loans, Mortgage, Personal Loans


Getting denied for a loan application can be very discouraging. However, you still have options to appeal the loan denial and potentially get approved on your subsequent attempt in Canada. Follow these pro tips to guide your appeal.

Dealing with a loan denial in Canada is never easy. But understanding the specific reasons for your denial and taking steps to improve those areas is key to setting yourself up for success on appeal. With some persistence and preparation, you can overcome initial loan denial and finally get approved.

Carefully Review the Details of Your Loan Denial in Canada

First, meticulously review the adverse action notice or denial letter from the lender outlining their exact reasons for declining your loan application in Canada. Gaining clarity on the specific factors that led to their decision will help direct your appeal approach.

Some of the most common reasons for loan denial in Canada include insufficient income or assets, high existing debt obligations, low credit score, limited credit history, or incorrect information provided.

Double Check for Any Errors in Your Original Loan Application

Since mistakes do occasionally happen, verify that all of the income amounts, employment details, current debts, assets, and other key details you listed on your initial loan application are completely accurate and up-to-date.

Providing incorrect amounts or details, even inadvertently, could have skewed the lender’s analysis and contributed to the initial loan denial in Canada. Notifying the lender of application errors could potentially prompt them to reconsider your application.

Dispute Any Incorrect Information on Your Credit Report

Order updated copies of your credit reports from Equifax and TransUnion and meticulously check them for inaccuracies or errors that may be unfairly dragging down your credit score. This includes late payments marked in error, balances listed incorrectly, etc.

Getting any credit report mistakes fully corrected quickly and including your updated credit report with your appeal is critical, as loan denial in Canada often stems from low credit scores.

Build Your Credit History Through Responsible Use

For applicants who were denied a loan in Canada primarily due to limited credit history, taking 6-12 months to open new credit cards or other loan products and using them conscientiously can demonstrate you are ready.

Maintaining low balances and diligently making payments in full and on time will start building your credit profile. Then you can re-appeal with a stronger history.

Pay Down Existing Debts to Improve Your Ratios

If a high debt-to-income ratio was the predominant factor behind your loan denial in Canada, take strategic steps to pay down credit card, loan, and other debt balances when possible. Also consider consolidating payments.

Presenting an improved DTI in your new application proves you’re addressing the lender’s concerns directly.

Provide Additional Documentation to Verify Income and Assets

Collect updated documents like recent pay stubs, tax returns, and bank account statements showing you can comfortably manage the proposed new monthly loan payments along with your current debt obligations. Providing concrete documentation helps back up your appeal.

Add a Cosigner with Good Credit and Income

If weaknesses in your own credit profile or debt ratios led to the initial loan denial in Canada, a cosigner with great credit, solid income, and low debts may be exactly what you need to qualify upon appeal. Just be sure you will not negatively impact their credit.

Adjust the Loan Amount or Repayment Terms

Tweaking the loan amount to a lower figure or extending the repayment period on your updated application helps demonstrate to the lender that you took their concerns about your finances seriously. Appeal with a smaller loan amount or longer loan term.

Explain Any Special Circumstances Impacting your Finances

If unexpected circumstances like medical bills or temporary unemployment detrimentally affected your finances and contributed to the initial loan denial in Canada, sincerely explain these situations in a letter. Outline how your situation has now stabilized.

Follow Up Quickly on Your Denial Appeal Letter

Time is truly of the essence when appealing a loan denial in Canada. Submit your written appeal as soon as possible, while your application and supporting documents are still fresh in the lender’s files. Waiting weeks or months to address the denial requires starting the process over. Move quickly.


With some preparation and diligence, it is possible to overcome initial loan denial and ultimately get approved when re-applying in Canada. For personalized guidance tailored to your situation, the lending experts at Get Approved Canada have extensive experience helping applicants navigate the appeals process. Don’t lose hope, get the expert help you need to get approved!

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