This article specially deals with looking into the several issues surrounding the rejection of a Personal Loan application. Once the application has been deposited in, there are various background processes that happen based on which the loan application is approved or disapproved.
1) CIBIL Score
Your CIBIL (credit Information Company) or credit score should be at least of 750 in order to be considered for sanctioned. This is the main cause why every individual must buy a credit details report preceding to their application, because if your Personal loan is disapproved once, it might take a while before you will be capable to apply for a loan again (i.e. after the completion of six months)
2) Documents mismatch / document fabrication
When people are in emergency requirement of cash, they tend to lose visibility of what’s at stake when they compose documents such as pay-slips in order to become eligible for a bigger loan amount. Probably, banks are not that simple to fool around with. The moment a documents or information mismatch is observed by the bank where you’ve applied for the Personal Loan, the details will be passed on to every another bank, there finishes your chance of even applying for loans in other bank, or for the lifetime.
3) Exceed repaying capacity Limit
This occurs when the people applies for a loan, however his ability to pay the installment is a big question. For every individual, only a definite portion of his stipend can be spent towards paying installments while the remaining is needed for living or regular expenses. If the client is already paying for either a credit card or loan EMI, then banks tend to view such cases cautiously.
4) Customer Profile Score
For each and every loan portfolio presented, the bank rates the profile on several aspects such as the stipend, residential stability as well as subsequent financial records. Every bank puts forth a cut off score which requires to be completed by the individual.
Even the smallest details matter a lot, for example, if there is deficiency of cooperation during the verification process (Business verification, residence status verification and many more), or sometimes the information provided by the customers are not 100% accurate. Having no loans or credit cards also make creditors cautious, in this case the CIBIL score is usually a -1 or 0. Where -1 implies no credit history whatsoever and 0 implies transactions yet to be simplified in your report.
Now that you have had a look at the main reasons behind Personal Loan application rejection, let’s take a focus at the solutions or rather best performs tips to help mend your chances of approval:
Maintain a positive credit record
Whether it’s your loan or credit cards, ensure that you repay promptly, to have an acceptable credit score. Avoid late payments or credit card settlements as these are some of the most common reasons for your loan application to be rejected.
It is true that minimum paperwork is involved when it comes to personal loans, but even the minimum needs to be absolutely perfect. Apparently, banks are not that easy to fool around with. The moment a document mismatch is noticed by the bank where you’ve applied, the information will be passed on to every other bank, there ends your chance of even applying for loans elsewhere, for the rest of your life.
Never exceed the repaying capacity
It is always a good idea to not be knee deep in the debt pool, never engage in too many loans and then end up not repaying them. Although banks ensure you stay within the FOIR limit, being proactive and wise in your spending habits will definitely give you an advantage.
Ensure you co-operate fully throughout the entire loan application process, because it is you who’s going to gain or lose at the end of it all.
It is always a good idea to maintain credit cards, so as to have a credit history to show while applying for loans in the future.
Applying for personal loans has never been easier, whereas getting an approval has always been a bit tedious. As long as you do what is required of you, your loan will be disbursed before you know it.