How to Proceed When Your Personal Loan Application is Denied
Having your personal loan application denied can leave you wondering what went wrong. While there are many factors that affect your personal loan approval, it is worthwhile to take a moment to reflect rather than re-apply again. It may be difficult on pass on offers of getting an instant personal loan online, but it is important to understand the reason behind the rejection first. Personal loans are unsecured form of finance and therefore, lenders are a lot more cautious when judging your application. To answer the common question, ‘How can I get a loan after being declined?’, here are a few pointers you can follow.
Wait For Appropriate Time Before Applying Again
Every time you make an application for credit, a hard inquiry is made into your credit history. These hard inquiries lower your credit score temporarily and show up on your credit history. So, the answer to the question ‘What happens if your loan application is denied?’, is simple: your credit score suffers. Consecutive applications like these show you as credit hungry. This tag simply means that lenders see you as a risk. They fear you will not be able to handle credit given to you. Generally, it is appropriate to wait at least 3 to 6 months before making another application.
Look For a Lender With Relaxed Eligibility Criteria
If you are wondering, ‘Why does personal loan get rejected?’, it is important to know that
the denial of a personal loan can simply boil down to your ineligibility for a loan from that specific lender. Since personal loans are unsecured in nature, lenders observe strict verification techniques for approval. In order to avail a sanction, you will have to meet the personal loan eligibility criteria stated by the lender.
Generally, lenders require you to be a regular income earning residing citizen of India in order to apply for a loan. Along with this, you need to be aged between 23 to 55 years in order to make a successful application with most lenders. Many lenders also have a city and salary specific cut off for eligibility. So, in case you face a rejection based on eligibility terms, do check criteria of a new or same lender before applying once again.
Showcase Steady Income
One factor that plays an important role in getting approved for a personal loan is your income. Having adequate and consistent income assures lenders of your repayment ability. If you have recently changed jobs then applying for a loan in between job switches without having at least 3 years of income proof in hand can land you a rejection.
Faced with such a situation, wait until you secure a steady job in a reputed organisation, then reapply. A good income will help you make the most of an instant personal loan online on easy terms. Whenever you apply for a loan, remember to use personal loan EMI calculator to gauge your ability to make repayments based on the amount you’re applying for. This valuable insight will help you optimise your application, increasing your chances of approval.
Build Your CIBIL Score Before You Apply
Your CIBIL score plays a crucial role in the application process. Lenders pay special attention to your credit score as you have no collateral to stand as a security for you. Having a CIBIL score below 750 can be the cause of your application being rejected. So, before making fresh applications, work on your score and increase your creditworthiness. Building your credit score is fairly simple and you can take time between applications to clear unpaid dues, secure better income, or service an existing long-term loan on time in order to improve your score.
Lower Your Debt to Income Ratio
Your debt to income ratio is the measure of your monthly repayments divided by your gross monthly income. It is a value that lenders use to determine your ability to make successful repayments on your credit. The higher the ratio, the lesser are your chances of approval as most of your finances are already being utilised to make payments elsewhere. In case your existing debts are lowering down your debt to income ratio, then you can look for better opportunities to earn more money. This can be in the form of a part-time job or a salary hike, or you can work on clearing existing debts and freeing up your ratio to strike a healthy balance.
When you adhere to this checklist, you can improve your chances of getting an instant personal loan online. Additionally, one of India’s leading lenders, Bajaj Finserv, has further simplified the personal loan application process. You simply check your pre-approved offer for a customised personal loan deal without any hassle. The Bajaj Finserv Personal Loan is among the best in the market for the benefits and exclusive features it offers. These include instant personal loan approval, high borrowing amount of up to Rs.25 lakh, and same day loan disbursals, coupled with the flexi personal loan feature. You can avail all of these benefits with minimal documentation at nominal personal loan interest rates.