For personal or business purposes, external sources of finance are considered an ideal option by individuals. To determine the eligibility for a loan, individuals may visit an online website and provide details like age, preferred loan amount, and occupation on the loan calculator. The tool will give a list of offers based on the information provided.
A personal loan can be used for a wide range of purposes like the renovation of a home, child’s education, wedding, or for consolidation of a debt. In case a loan application is rejected, there will be a waiting period, which ranges between 30 to 90 days. Individuals can only re-apply after the waiting period ends.
How can one avoid personal loan rejection?
A loan rejection may lead to a major financial concern. To avoid this, you should keep the following things in mind:
- Check the loan eligibility
In order to increase the chances of loan approval, it is important to meet the eligibility requirements for a personal loan, which are set by the lenders. Check the criteria well before applying.
- Check the credit score
The credit score, based on an individual’s previous loan repayment history, plays a prominent role in any loan approval process. A score above 750 is preferred by most banks. A higher score directly translates to a quick loan approval. That’s also the reason why you must pay your credit card bills on time. A delayed or skipped credit card bill payment will affect the credit score negatively.
- Do not exceed the credit limit
To maintain a good credit score, remember to never exceed the credit limit. It is advisable to use only 30 percent of the limit.
- Do not apply for multiple loans at the same time
Assess your financial needs when applying for a loan. A larger number of loan applications will have an impact on your credit score.
- Review the credit report
There are chances of human errors in the credit report. Hence, review the same once or twice a year and in case of errors, bring it to the notice of the bureau for the purpose of rectification.
- Make EMI payments on time
Loan Equated Monthly Installments (EMIs) can be timely paid with an auto payment option from the banks. This will ensure that there are no defaults in the payments and the credit score is maintained positively.
- Verify the documents furnished with the application form
Before submitting a loan application, it is advisable to check the details provided and the documents submitted. The identity proof, income proof, and address proof should be submitted along with the application form.
Personal loans are easily approved; but there are certain factors that may cause the application to be rejected. Hence, it is important to check the aforementioned points and ensure a hassle-free approval process.