Rejection is tough and a personal loan application rejection is even worse! Most often we face a situation where we are in dire need of funds and this is when we think of a personal loan. A personal loan acts like a savior in times of financial urgency. Check this blog to find out why your personal loan application gets rejected and how can you overcome this situation. This blog might help you take a right financial decision in your life.
It is really not possible to get your ICICI Bank personal loan application approved at all times from a lender. Since lenders consider a number of factors before approving the loan application, the final decision could vary. The process of loan approval is different from one lender to another. If your loan application was declined, do not be disheartened. Understand the reasons behind the rejection so that you do not make the same mistakes the next time you apply before personal loans for bad credit.
Eligibility
Before you apply for any loan, you need to check the eligibility criteria with the lender. Every lender will have different eligibility requirements and you need to understand the same. The lender will judge your age, job stability, citizenship, your credit report, salary and your ability to repay the loan. If you make a loan application without checking the eligibility requirement, there are high chances of rejection. Your loan application should begin with an understanding of the eligibility criteria of the lender you intend to approach.
Poor Credit History
You need to a good credit score to get the personal loan application approved. No one would be willing to lend money to an individual who has a track of skipping EMIs and making late payments. If you have a poor credit history, the bank will consider you a risky borrower. Your credit report will reflect everything about your repayment history. Hence, you need to correct your credit score in order to get the loan approved.
Mistakes in the credit report
Any errors in your credit report can stop you from getting personal loan approval. There could be errors like payments being reported incorrectly or closed accounts reflected as open. Even a false report of late payments could be dangerous for your credit score. Hence, you need to check the credit report for any errors and inform the error to the credit agency.
Having many loans with little income
If you already have a personal loan which is not closed yet, then the income would be minus the current credit payments and the balance amount will be considered as your real income. If the lenders consider that taking another loan will strain your income and paying for the present loan will become difficult, they will reject the loan application. This is because you already owe a lot of money and you will be considered as a high-risk borrower.
Insufficient collateral
There are some loans which require you to provide collateral in order to borrow. It could be a property or any other asset. You needs to be a source of liquid money that the lender can use if you default. It will cover the risk associated with the loan. If you do not have adequate collateral to provide for the loan, there are chances of your application being denied.
Job Stability
Every lender lays a lot of importance on the stability of the job. There are banks which require an applicant to have worked in the current company for a period of three years or more. This is a part of their eligibility criteria. If the future of the company seems to be unstable, the lender will not be keen to provide a loan to an applicant from that company.
Your loan application has been rejected previously
If your loan application has already been rejected in the recent past, it is not a good idea to keep applying for a loan and getting rejected because it will get recorded in your CIBIL report. It is advisable to find a reason for the previous rejection, sort it out and then make a fresh application.
Being a loan guarantor
If you are a loan guarantor for somebody, you need to ensure that the applicant repays the loan without any hassle. Do not agree to sign an application for them because if they fail to repay the loan, then you will be accountable for the payment. If you fail to make the repayment, you will be blacklisted in the CIBIL report.
Your residential address is on the blacklist
If anyone in your house has not paid the monthly payments, it would be reported to CIBIL and they will take action against the same. Even banks have addresses saved in their defaulters’ records. Your residential address will be shown in the defaulter’s record of the bank and in the CIBIL report. It shows you are not responsible enough and have defaulted in the past. This is a big reason behind a loan application being rejected.
Incomplete documents
When you make a personal loan application, there are certain documents you need to provide. If you fail to do so, the loan application will be rejected. Additionally, if you provide incorrect information about your salary or employment, there are chances of the application being rejected.
Before you plug-in for a Aditya Birla personal loan, it is advisable to check all the loop-holes first so as to increase the chances of loan approval. If your loan has been rejected in the past, it is advisable to identify the reason behind rejection and then make a fresh application. You might want to speak to the lender for details about the rejection of your loan. It will help you prepare your new application in the most appropriate manner. If the rejection is due to the credit history or CIBIL report, you need to work on building the credit history before you make a new application. Allow sometime between your old application and new application. Do not make a new application with a new lender immediately after being rejected for one.
