Loan declined: what makes sense now

Lenders must assess creditworthiness and may not conclude a contract if there are significant doubts. A rejection is therefore often information about the data — and you can check that data.

What the duty to assess means

Under § 505a (1) of the German Civil Code (BGB), the lender must assess creditworthiness before concluding a consumer loan agreement. For a general consumer loan, it may only conclude the contract if the assessment shows that there are no significant doubts that the loan will be repaid as agreed. A bank can also decline an application for its own business reasons, for example because the amount, purpose or customer group does not fit its lending policy; there is no right to be granted a loan. A rejection does not mean that anyone considers you unreliable. Often the available data simply did not reach the threshold of the assessment. That is an important difference — because data can be checked and corrected.

New rights after a rejection from 20 November 2026

The Act transposing the EU Consumer Credit Directive (BGBl. 2026 I No. 139) changes the rules on creditworthiness assessments. For contracts from 20 November 2026, the lender must assess creditworthiness thoroughly and may only go ahead if you are likely to meet your obligations as agreed (§ 505a (1) BGB). If it decides against the contract, it must tell you without undue delay and, for a general consumer loan, refer you to debt advice services where appropriate. For contracts before that date, the previous “significant doubts” standard continues to apply. What else changes from that date is covered in the guide New consumer credit rules from 20 November 2026.

If the assessment involves automated processing of personal data, you can request human intervention for a general consumer loan under § 30 (6) of the Federal Data Protection Act (BDSG). This includes a clear and understandable explanation of the assessment, including the logic and risks of the automated processing, the right to state your own point of view, and a review of the decision by the lender. The lender must inform you of these rights. If it declines because of information from a credit bureau, it must also tell you about that information, the details of the database consulted and the categories of data taken into account (§ 30 (7) BDSG).

• Request a review by a person
• Explanation of the logic and risks of the automated assessment
• State your own point of view
• Database and data categories if declined after a credit bureau check

Look at your own data first

Before you make further applications, request information about the data stored about you. Under Art. 15 GDPR (DSGVO) you have a right of access to your data at every credit bureau (Auskunftei), and a copy of the data must be provided free of charge. Outdated, duplicate or simply incorrect entries do occur and can be corrected or deleted there. Also check whether a conditions enquiry or a loan application was made: only the latter is recorded by credit bureaus as an application.

• Request access under Art. 15 GDPR
• Have incorrect and outdated entries corrected
• Make a conditions enquiry instead of a loan application
• Do not apply several times in quick succession

What can be changed in the application itself

Three levers have a direct effect on the assessment: a lower loan amount, a longer term with a correspondingly lower instalment, and paying off a small existing debt that is counted in your monthly outgoings. A second borrower can also change the assessment — but that person is then fully liable as well. This is a decision with considerable consequences for both of you and not a formality to be signed in passing.

And if an approval was wrong after all

The reverse case is also covered by law. If a lender breaches its duty to assess creditworthiness, the agreed borrowing rate is reduced under § 505d (1) BGB to a market rate defined in more detail in the law. The borrower may also terminate the contract at any time without notice, and in that case there is no entitlement to early repayment compensation (Vorfälligkeitsentschädigung). This shows how seriously the law takes the duty to assess — and is one more reason not to read a rejection as a judgement of you as a person. If several debts are weighing on you at the same time, the right next step is not another application anyway, but free debt advice (Schuldnerberatung).