Whether you want to start with a textile business or need a vacation fund, lending money from financial institutions is a viable option. However, there might be times when your request for personal loans meets a dead end after the bank reviews your application.
Don’t lose heart yet!
You can re-apply but not without knowing what came between your dream fulfilment and your loan approval.
Here’re some factors whose consideration can set things right for your loan application in the future!
1. Weed out the trivial mistakes.
Figuring out the root cause at the beginning itself can help you fix your re-application form without any delay. Usually, the providers are supposed to inform you about the causes behind the disapproval. Some of the most common reasons seen are:
- The difference in credit score parameters
- Inaccurate information in the lender form
- Avoidable Mistakes in the application
- Demand for an unaffordable loan sum
- Failure to submit the loan documents on time
Other than these, there might be some factors with the lender which can work against you:
- Conditional loan advancement to candidates on no-cash salary
- Approval for application having ‘n’ numbers of work experience
Solution: It’s best to ask the institution directly about the possible reason(s) for your application rejection. Post its reception, you can start working on a new proposal that checks off all the boxes for loan sanctions in the same bank.
2. Find out your credit history.
One of the most prominent causes of disapproval is the inability of the candidate to furnish a good credit score, and it’s a valid concern for banks. Evaluating the credit score helps the institutions analyse your capacity to pay back on time.
Solution: If you don’t have a loan-worthy credit score, you can turn the situation around by:
- Paying your outstanding bills before time and ahead of your loan application.
- Ensuring that your monthly EMIs fall in the category of 30-40% of your monthly income.
- Avoid taking multiple loans at one point in time.
- Keep your CIBIL score in check to ensure timely enhancement of score.
- Keep your documents handy.
Even though the lenders have simplified the loan application process by requiring only a few documents, wrong paperwork can still form a reason for rejection.
Solution: One of the simplest ways to avoid such occurrences is by making a list of essential documents that your form requires. Quite often, you will need the paperwork like:
- Copy of your salary slips
- Proof of income
- Valid government ID
- Bank statements
- Keep a tab of prior negative information.
While the majority of unfavourable data doesn’t form part of your current credit history, there might be certain lenders who have specific rules. For instance, if you ever defaulted on repayment of a previous loan, the bank might avoid offering you any lending option.
Solution: The most efficient way to convert history in your favour is by increasing the positive information after the previous event.
In a nutshell
Personal loans’ disapproval can be really disheartening if you’re in urgent need of funds. However, by keeping the lender’s requirements in mind, you can easily circumvent the situation in your favour.
So, next time when you’re applying for re-applying for a loan, ensure that you are well aware of the qualifications. And, don’t forget to keep your documents accessible to streamline the application process!
