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Has your personal loan been rejected lately? There can be multiple reasons for a disapproved loan. Below tips can help you re-apply for the loan with better prospects of approval:
- Lower Credit Scores: Credit scores represent your creditworthiness based on credit history. A lower credit score can discourage lenders from sanctioning loans.
- Insufficient Income: A higher-income indicates a good chance of you repaying the loan in due time. A lower-income weakens your loan application.
- Higher Debt to Income Ratio: A debt to income ratio is the ratio of total monthly debt payments to your gross monthly income. A higher DTI ratio indicates the probability of trouble in repayment in the future. Generally, lending parties prefer a DTI ratio lower than 36%.
- Incorrect Information: Any false information or discrepancy in facts can make the lenders suspicious, and the loan can get disapproved.
- Analyse Your Loan Disapproval to Understand the Gaps: Study your loan application rejection and figure out the probable reasons so that you can address them in the future. Some of the reasons may be:
- Improve Your Credit Score: Credit score or CIBIL scores range from 300 to 900. The score closest to 900, is considered the best score but anything above 750 is regarded as a fair score. Be disciplined in timely payments of EMIs and loans. Also, try to opt for an extended period for loan repayment. Avoiding too much debt at the same time and periodic checking of your CIBIL report for any errors can also help in improving the credit scores.
- Maintain Low Debt to Income Ratio: A lower DTI ratio can improve the chances of your loan getting approved. Try to make extra payments towards your monthly debts and postpone additional loans. Also, postpone substantial purchases to avoid the increase in credit. You can also look for extra income sources to keep the DTI ration lower.
- Get a Co-applicant: A co-applicant can be any person who will be responsible for the repayment of the loan, along with you. A co-applicant with a good credit score and sufficient income improves your personal loan eligibility chances.
- Research and Compare Different Lenders: Compare different lenders based on their criteria of lending and rate of interest charged. Apply for a loan only after thorough research and comparison. Also make sure to prepare your documents properly with authentic and complete information, as desired by the lender.
Improve Credibility, Get Your Loans Approved A disapproved loan should not worry you anymore. Following the above tips and consistently working upon improving your credit scores, avoiding unnecessary debts and responsibly paying current debts can help you in getting loan approvals, quickly.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
