A personal loan can be advantageous when you are in dire need of money or have crucial financial needs to fulfill. To a great extent, a personal loan helps meet your financial needs and saves you from liquidating your investments or depleting your savings. These loans are also preferred because they have no end use and can be used for any purpose, be it a wedding, education, medical emergency, debt consolidation, home renovation, etc. Therefore, it could be disheartening to know that your loan application has been rejected. This unfortunate news can shatter all your dreams in an instant. However, you could be saved from personal loan application rejection if you know the causes. Here, you must know some aspects of applying for a personal loan to avoid rejection.
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Documentation
Furnishing complete documents is crucial in your loan application. Lenders gather all your information and authenticate it with the documents you submit. Therefore, submitting incomplete or inaccurate information in the documents can lead to application rejection. To avoid being rejected, you must furnish documents that are updated and contain accurate information.
Eligibility criteria
For personal loans, lenders closely scrutinize your eligibility to ensure that you can repay the loan comfortably. Therefore, if you are ineligible and still apply for a personal loan, your loan could be rejected. To avoid that situation, ensure to check your loan eligibility. You can either visit the lender’s website or talk to their representative.
Sufficient income
Your income is a crucial eligibility criterion as it reflects your repayment capacity. You must have a regular and steady source of income from your job, profession, or business. If you do not have a regular source of income, you could have trouble repaying the loan on time. Also, your income should meet the income criteria of the lender. While applying, you must submit enough proof to declare your income and show that you have sufficient income for the loan repayment.
Existing loans
Every loan you take adds to your debts and affects your credit score. Therefore, you must avail a loan only when you need it. Too many loans affect your repayment capacity and also your loan approval. The lender reviews your credit report and existing loan when you apply for a personal loan. Therefore, you must either repay all other loans before applying or at least pay all the EMIs on time.
CIBIL score
As personal loans are unsecured, their approval is significantly affected by your credit score. If you have a low credit score, the lender can reject the personal loan application right away. You must have a score of at least 700 to get a personal loan.
Too many loan rejections can lower your credit score, impacting the chances of further loan approval. Therefore, you must consider these aspects before applying. Fulfill all your dreams and apply for personal loans today.
