During the period ranging between 2015 and 2018, unsecured loans have witnessed a growth of approximately 4 times the bank’s credit. The increase in borrowings is fuelled due to a number of factors. While personal loans are easier to avail due to reasons that include faster approval and disbursement, collateral-free loans etc., not every application might be approved. So what can you do if your personal loan application gets rejected?
Here are 4 Things That Can Help you in Setting Things Right if your Application is Rejected:
Identifying the root cause of the rejection can help in nipping the problem in the bud increasing the chances of your application being approved in the future. In addition to helping your loan is approved, it can help in improving your financial situation in the long run. Loan providers are required to notify the applicant about the reason for rejection. The various reasons that could lead to your application being rejected include:
Apart from these, some other reasons which are entirely dependent on the lender’s policy may also have acted against your favor. For instance:
The prime concern of every lender is that the money lent should be honored on time. The credit score is an important factor while evaluating a potential candidate’s eligibility for a loan. Lenders refer to the credit score computed by credit rating agencies to determine whether your application will be accepted or rejected. A credit score is a three-digit number that ranges between 300 to 900 and reflects the applicant's ability to repay the loan in the future. A good CIBIL score of 750 and above is considered excellent by most NBFCs and increases the chances of your loan being approved at competitive rates of interest. Banks may have a higher threshold for this particular criteria.
If a low credit score is what led to your personal loan being rejected, this is what you can do to improve your CIBIL score:
3. Submitting Inaccurate/Incomplete Documentation
Loan providers have simplified the process of borrowing which requires the borrowers to submit only the basic minimum documents required to verify their eligibility and process their application. The list of personal loan documents include:
Must Read: How to Apply for a Personal Loan Online?
Loan providers evaluate your ability to service the installments on time. Frequent switching of jobs gives the lender the impression that you might not have the financial stability to repay loan installments on time and can lead to your loan application being rejected. The basic employment criteria to be able to apply for a personal loan is as follows:
If your application is rejected due to frequent job changes, consider waiting for a period of a minimum of six months with your current employer while working on your credit score before reapplying.
Determine your eligibility using a personal loan eligibility calculator to help you plan your finances better and increase the chances of your application being approved. Happy borrowing!