While the process of applying for a personal loan is simple and easy, some personal loan applications do get rejected. Several loan applications get rejected due to small reasons. Though applying for a loan is an easy and quick process, you still need to be careful before submitting all your documents to the bank. You not only have to look at the interest rates but also have to look at your documents and more importantly – your bank credit scores, which affects your loan process. Having a low credit score not only affects your EMI rates but also your loan application. There can be many reasons for your personal loan rejection.
Also, there can be several reasons to take a personal loan. You can take a personal loan for education, wedding celebrations, for travel or for medical emergencies. But personal loan rejection can leave you feeling disappointed. The reason for rejection lies in the silly mistakes made. So, it’s important you consider the following point for a loan approval.
- Credit score history
Credit score and credit history are the things a bank looks in before approving your personal loan. A good credit makes borrowing easy and a bad credit score makes things more difficult.
Having a bad credit score can even get your loan application rejected. If there was any past loan repayment default showing in your credit score history then this might be a point to worry about in the loan approval. Based on your credit history CIBIL gives you scores called as credit scores. So, if you’re facing a problem of poor credit score then you need to work on that before applying for a loan.
- Insufficient income
Having a low income can cause you a problem. Though you have a good credit score rating, but having a lesser income can still be the reason for your rejection. The bank can hesitate if you have less income as they worry about you repaying the loan. Also if you are already under the burden of EMIs then the bank may rethink about your application. If your application is rejected due to low income, it is advisable to go for a joint personal loan.
- Improper documentation
Not submitting proper documentation can be a reason why you have been rejected for a personal loan. Spelling mistakes, improper documentation arrangement, not attaching income documents and much more such problems related to documentation can lead to a rejection. Cross checking your documents before applying is therefore of the utmost importance.
Now once you know what mistakes cause a personal loan rejection you can certainly move forward towards improving them. Also, it is worth keeping the above points in mind to ensure that your loan application is not rejected the next time you apply.
