Personal Loans are also known as unsecure loans as they don’t require any collateral or security for the loan. This is the reason why the lenders scrutinize every Personal Loan application using a an extremely meticulous comb. If even one element is not in line with the criteria for eligibility and they deny the application. The banks do not be willing to put their money at risk unless they are absolutely perfect.
Personal Loan Rejection is a blog that aims to help people who have been rejected for a personal loan to find the right loan for them.
If you were rejected for a job It is likely due to any of these reasons:
1. Your Credit Score
Have you paid all of your EMIs as well as credit card balances in time? If you have a chance that you’ve missed the payments to your credit card your credit score may be low. A low credit score doesn’t reflect well on your financial picture. If your past record shows negative marks, banks are aware of the likelihood of defaulting in the future. Therefore, banks have an excellent reason to deny the loan request.
The Personal Loan application you submit can be rejected even though you don’t hold any financial product like the loan or credit card. This indicates that you have a weak credit score that makes lenders cautious about approving the loan.
2. High Debts
Your ratio of debt to income is important to lenders. When you’ve got too many loan on, and close to 40 percent to 50% of your earnings go to repayments, then banks might not want to provide a new loans to you. The excessive amount of loans will cause them to question whether they can repay them or not. Once you reach a certain point your earnings will be insufficient and you’ll be in default. Therefore, it’s better to pay off a loan, or two prior to applying for a new loan.
3. Unstable Employment
If you’ve been changing your job at least every 6 months the loan you apply for is likely to end up on the pile of rejected applications. The lender must know that you have a steady job and an ongoing income that can guarantee your loan’s repayment. If you’ve had a tendency to change jobs frequently and have not been able to prove your stability. Today, banks generally have criteria that require you to stay at the same place for at minimum one year. If you don’t satisfy this criteria will receive rejected for their application for a loan.
4. Your Total Income
If the amount you earn is not enough to pay for the EMIs and the lender could decide to deny you Personal Loans. It is important to verify their eligibility criteria thoroughly and assess yourself prior to applying. The majority of banks have the minimum income requirement, which you must meet. Your income must be at or greater than your EMI.
5. Incorrect Details in Application
Sometimes, everything is fine however, your application may yet be denied. The reason may be simply a matter of incorrect information, missing documents or an inconsistency with the information you’ve provided. Therefore, ensure that as you fill out the application form, you make every mistake. Make sure you double-check all information and the evidence you send for the lender.
Also, you should look over your credit report to find any errors. There is a chance that you are not doing any wrong thing, but instances like identity theft , or inaccurate entries could lower your credit score.
6. Too Many Rejections
Did you know that every loan request you submit is recorded by the bureau of credit? Therefore, each time you apply for a loan and it is rejected, it appears in your credit file and reduces the score. The repeated application can negatively affect your credit score.
7. Right Age and Work Experience
There are many banks that have strict regulations concerning the age of loanees as well as the duration of work experience. Most of the time, you must be employed for a total that is at least two years before applying for a personal loan. In addition, you must be at minimum 21 years old to be qualified to apply for the loan. The maximum age for loan applicants is retirement age or 65 years old.
There is no assurance the loan request will get accepted. These mistakes are among the most frequent mistakes, and you should be sure to stay clear of these. If you’re thinking of making an application for a personal loan make sure that you keep your credit report clear and give accurate details. However, it’s dependent on the lender’s qualifications to determine whether you are eligible for an loan, or not. The only thing you need to do is comply with these guidelines.