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Personal Loan Rejections And How To Avoid Them
“Your personal loan application has been rejected”. This is a statement that you would never want to hear or read. A personal loan rejection not only comes in the way of solving the problems for which you applied for it in the first place but also reduces your chances of getting credit in the future as it reflects badly on your credit report.
But what is it that leads to a personal loan rejection? The most obvious reason is poor credit history. If your credit score is not up to the mark, the lender might not offer you an unsecured loan. Having said that, it is also possible that your application can be rejected for other reasons.
Let’s see a few reasons why your personal loan was rejected and how you can avoid a personal loan rejection-
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Your heart is not in it:
Incomplete or incorrectly filled applications are the leading cause of why personal loan applications get rejected. You need to understand here that a personal loan is more of a gamble for the lender. They will not place their trust in you if you show a laid-back attitude in the beginning itself.
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Make your match:
Your relationship with a lender is also one of its kind. You need to ensure that there is no expectation mismatch between the two of you. Check their eligibility requirements in terms of age, job experience, minimum salary and the amount of loan you need before you actually apply.
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You’ve been bad:
We can never emphasize enough on the importance of maintaining a good credit score. You need to maintain a good credit score if you wish to avail an unsecured loan from any lender. In case your report is not good enough, wait before you apply for a loan. Follow tips and tricks to improve your credit score and bring it to a decent number. Then apply for the loan.
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Play along but don’t play with it:
You need to comply with the requirements of a lender, true. But this does not mean you would tamper your documents to fulfill them. You have to be very honest with your lender about every detail. Anyhow they perform a thorough check before approving any loan. So you can not escape. Be honest since being dishonest is only going to do more harm.
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Too much on your plate:
You have a home loan that you are currently re-paying? Your car is also under a loan? And you just took an education loan for your kid? If you have too many loans under your name, it is obvious that lenders would think of you as a risky customer. Being risky here means that you might not be able to repay the loan amount. So having too many loans lowers your chances of getting a loan.
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It’s not you, it’s what you do:
If you do not have a steady job, this can lead to a personal loan rejection. Or if you have been job hopping for some reason, again this can be a reason for a personal loan rejection. If you are a freelancer, your income is neither steady nor defined. If you face a personal loan rejection, you should not be surprised.
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Trying too hard:
Applying to a lot of places for a personal loan and being denied can be a huge cause for a personal loan rejection. You should apply only in places where you meet the eligibility requirement. Your chances of approval will increase. Apply via one-stop portals like IndiaLends. This will ensure you do not have to apply to several places or face rejection.
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Your house has history:
This is not a common one but still, you can not ignore it. If your house belonged to a loan defaulter at any point in time, the address will be on the blacklist. So now when you apply for a loan and fill in the same address, the lenders might perceive you as a defaulter. Ensure this is not the case with you and if it is, talk to the officials before applying so they can remove your address from the blacklist.
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Other mishaps:
Apart from the aforementioned reasons, there might be certain small mishaps that might cause a personal loan rejection. A bounced cheque. Your monthly salary was not credited on time due to some reason. Being a guarantor to someone and they turn out to be a defaulter. Your personal loan could be rejected due to all these reasons. Additionally, if you have applied for the loan with a co-applicant, their credit score is also considered. So even with a good credit score, your loan can be rejected if their credit report is not satisfactory.
Bonus: 2 tips to increase your chances of a personal loan approval-
Maintain a healthy credit report: You should check your credit report frequently to ensure everything is going well. Check your credit report for free now.
Know your bank: If you have built personal relations with your bank, chances are they trust you and your repayment capabilities more than the papers.
Now you know what leads to a personal loan rejection. We hope you will be able to dodge them and fulfill all your dreams. Another good news that we wish to share with you is that you can get instant approvals on loans up to 2 Lacs, so no waiting. We would love to answer any questions that you might have. Do let us know in the comments below.
Until next time!
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