Has your Personal Loan application been rejected in the first attempt? Don’t worry, you are not alone there, a large number of personal loan applications get rejected in their first attempt due to various reasons. You just need to fix these reasons and reapply to get your personal loan approved. However, while reapplying you have to be sure that the mistakes which you made previously should not be repeated.
As in the real world, even in the banking domain, the first impression is the last impression and as your first attempt already got rejected so you have to be more careful in your second attempt. You need to work on all the possible reasons that lead to the rejection in the first place and need to decrease your loan rejection chances. In this article, we are going to discuss few things to keep in mind when you are re-applying for the personal loan so that you get it through without any hassles.
Points to Consider While Re-applying for a Personal Loan
- Analyse Your Status
Find out the reason why your personal loan application was rejected. It is the first thing you need to do as you can improve only when you know the reason for your failure so that you can work on it. Lenders are generally glad to give you an explanation to answer you but for that, you need to ask them.
The most common reasons for being the denial of a personal loan application are-
- Low credit score
- Low income
- Check Your Credit Report
You can check your credit report through the CIBIL website. All you need to do is to go the website, provide your details and make the payment to get your CIBIL Report. You need to review your credit score very carefully. Make sure the report is up-to-date and has no mistakes.
It is possible that your credit report may contain an errors which were harmed your credit score. If there are any errors, immediately write a letter to the CIBIL requesting to update the incorrect information. CIBIL is legally obligated to investigate regarding the dispute claims and to correct the mistakes which happened.
- Take Action to Improve Your CIBIL
Low CIBIL is one of the most common reasons behind the rejection of personal loan application. But what happened in past can’t be undone but steps can be taken to improve it.
The repayments towards any of your loan(s), credit card(s) or bill payments are one of the most important contributors to one’s CIBIL score. Hence to improve it you need to be timely with all your payments. This will not undo the previous delays and/or defaults, but it will get your credit score going in a right direction henceforth.
- Deducing your Debt Balance
If you are in too much of debt it increases the risk for the lender and it can be one of the reasons behind the rejection of your loan application. To qualify for the personal loan you need to have a lower debt amount as it increases your credit utilization rate. Generally, it is good to have FOIR around 30%..
- Take Some Time to Sort Your Finances
If you applied for a personal loan and it got rejected, don’t be in hurry and start applying again and again. Each time you apply the lender will consider various criteria and your application may get rejected again. As CIBIL is one of the most important criteria and your application got rejected because of that it may happen again. Everytime a lender requests your CIBIL Score, it gets noted as an enquiry in your CIBIL Report. Ideally the number of enquiries should match with the number of current loan(s) and credit card(s). More enquiries in the recent past indicate that other lenders have deemed you as unworthy of credit.
CIBIL score can’t be improved overnight and it takes months to improve your credit score. Hence, it is suggested to re-apply for a personal loan after 6 months.
Meanwhile, at this time you can work to improve your financial situation by repaying some of your debts and by being on time with all your payments. If you continuously apply for a loan and it keeps on being denied, it can further lower your credit score.
Don’t let a personal loan rejection discourage you. If it’s rejected don’t be in a hurry! Ask your lender, do research and then plan your finances accordingly and fix any underlying issues and then apply again.
