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9 Tips to Avoid Personal Loan and Credit Card Application†Rejection

 
  By : , Hyderabad, Andhra Pradesh, India       25.7.2018         Mail Now
 

While there is no magic wand that can get your application approved, here are 9 lesser-known facts that can help you avoid the pile of rejected personal loan applications while improving your odds of success.

Compare Your Options and Apply Only Where Your Chances of Acceptance are High

Different lenders have different approaches to risk and so, while some are willing to accept personal loan applications even from those with a low CIBIL Score, others have a strict eligibility criterion that you must fulfill if you want an approval.

Start by checking your credit score and assess your chances of being accepted for a personal loan. A high score of 750 means you are most likely to get accepted but a low score can prove to be an obstacle. In this case, you would need to conduct a soft search and compare lenders and products to know your chances based on their eligibility score.

Study the Credit Requirements and Work on Your Score Accordingly

Every lender requires you to have a different credit rating so check if you meet them. These requirements typically mean that you should not have any negative listings on your credit report. If you are not sure, ask the lender before applying for a personal loan. Most lenders have a dedicated online chat service to address your queries.

Your credit history, your previous credit dealings and your personal loan applications are the 3 most important things that determine your chances of approval or rejection. So review your credit report carefully, ensure that all your debts are cleared, all the accounts involving credit are clean and all the information is correct.

Only Apply for Loans That You are Sure of Repaying on Time

Every lender needs to ensure that the borrower is financially stable and does not have any existing debt obligations. So, before you apply for an instant loan, create a budget and assess your ability to repay the EMIs on time. Calculate your monthly spend on food, clothing, travel, groceries, bills and so on to arrive at a figure that you can safely set aside for your EMIs over a long period. However, if you plan to spread your repayment tenure over a longer time frame, you will end up paying more in interest.

Check the Minimum Income Requirements

Every personal loan lender will have a different minimum income requirement which may also change depending on the type of personal loan you need. Find out the required minimum income online and check your CIBIL score to ensure your loan is approved.

Make Sure the Purpose of Your Loan is Valid

Check online to see to if your loan purpose is actually allowed by lenders. If you are taking a secured personal loan, you may be faced with more restrictions as compared to an unsecured personal line of credit. However, every loan type comes with its own share of pros and cons.

Double Check Your Details

Verify your details and personal information to make sure the lender has no reason to reject your personal loan application on the basis of inaccurate information.

Confirm if Your Lender Needs Collateral

Certain lenders require collateral against the personal loan, and so they also check your assets to confirm that there is no risk involved. If you are looking for a personal loan that does not need collateral, you can opt for a personal line of credit.

Repay Your Existing Loans

The lenders wonít approve your personal loan if they find out that your income is not sufficient or your debt levels are going up and down or if you are already overloaded with debt or credit card issues. For this they calculate your debt-to-income ratio so before applying for a personal loan, make sure all your previous debts are cleared. Your debt-to-income ratio is calculated by dividing your repayments by your monthly income. Make sure to calculate personal loan EMI before going ahead.

Build a Credit History

If you donít have a credit history, you can secure a personal loan using your savings account or a certificate of deposit or you can apply online for a personal line of credit and get approved in minutes. If you are building your credit history from scratch, it is recommended to start with a secured credit card. Since your credit history is made up of your repayments, debt utilization, your credit applications and your credit mix; you should make on-time payments, retain a good credit mix, and maintain low credit card balances. You also need to keep a constant eye on your CIBIL Score and if you have an outstanding tax lien, you must pay it off as soon as possible to keep your credit report clean.

Following these 9 tips will drastically improve your chances of approval so keep this checklist handy and get started with your application.




TAGS: Personal Loan,   Personal Loan application,   applying for a personal loan,   loan on credit card,   moneytap,  




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