Personal Loan being turned down is a serious blow, especially when you’re in a situation where you have no other way to arrange for funds. So, before you apply again for the loan, it’s good to understand why your loan application was rejected in the first place, which will help you to sort out the probabilities next time.
Remember when you apply for a loan, you need to check for the eligibility to get a personal loan from any bank, as the lender will judge your citizenship, age, salary, job stability (you need to be working in the company for at least 3 years), primarily your true credit report and your ability to repay the loan will be considered as priority. In case of personal loans, the applications are rejected due to various reasons.
What went wrong?
Check for the CIBIL comments: CIBIL reports contain a numerical score and remarks by the lender. Sometimes banks will try to settle the loan for a slightly smaller amount combining all your EMIs or may offer to reduce the interest rate etc., to help you clear of your loan. If you agree to settle for the loan apart from the terms that was agreed upon while applying for the loan, it would be considered as a black mark on your CIBIL report. In short, if any comments like loans being “written off” or “settled” or “paid after the due date” banks consider these signs as a warning and rejects your loan.
We have made it simple for you to understand these in detail, so that the next time you apply for the loan it gets sanctioned without any hassle.
- Poor Credit History: You need to get a good credit score to be approved for the loan, after all no one will want to lend money to someone who has a track record of skipping EMIs, late payment of bills, defaulting on loans are all bad indications that reflect on your credit report. So, you would need to correct your credit record to get your loan approved.
- Errors in Your Credit Report: The errors in your credit report can stop you from getting a personal loan sanctioned. The kind of errors could be like payments being reported wrongly, closed accounts still showing as open, false report of late payments can be the most dangerous reason for the credit score to drop. So, once you have checked your credit report for such errors, the immediate step should be to intimidate the error with credit bureau.
- Juggling with too Many Loans and Little Income: If you have taken loan previously that has not closed yet, then your income would be minus from the ongoing credit payments and the left amount would be considered as your real income. And if taking another loan would strain your income, then paying for the current loan would be difficult, so the loan will be rejected has you already owe a lot of money. You’re more likely to be considered as a high-risk borrower.
- Job Stability: The lender gives a lot of importance on this point, certain banks insists that the applicant need to work in the current company for 3 years or more to be considered as eligible. Also, if the company’s future is at stake or seem to be unstable, the lender will back out from providing loan to an applicant from that company.
- Loan Application been Rejected Previously: If your loan application has been rejected once, it’s not wise to keep applying and getting rejected as this will get recorded in your CIBIL record. So, find the reason before you apply so that you can sort them out before you apply and approach another bank.
- Being a Loan Guarantor to Someone: When you stand as a guarantor for someone, you must be sure that the applicant can pay back the loan without any hassle, do not hurry in signing the application for them, if they fail to repay for any reason, then you will be accountable to repay the loan on behalf of that person, and in case you are unable to pay the loan you will be blacklisted in the CIBIL report.
- Residential Address on Blacklist: Anyone in your house who has slipped on paying the monthly payments would be reported to CIBIL, even banks will probably have the address saved in their defaulters records, in such case the chances for your loan to be rejected is high. As your residential address would find a match in the defaulter’s record of the bank and CIBIL.