Personal loans can help you fulfil varied needs instantly. You can fund your child’s education or wedding, go for your dream vacation or finance a grand wedding. You can even arrange funds for debt consolidation or home renovation with a personal loan. But it can be disappointing and disheartening to see your loan application rejected. It can spoil your plans and even put you in a financial crisis. However, if you take corrective steps after your loan application is denied, you can resolve the situation. Read on to find out more.
- Identify the cause
To take any corrective steps, you must know the reasons for the rejection of the application. Unless you do so, how will you find out what mistakes you are making? Usually, lenders inform you of the reasons for application rejections within 30 days. If they do not, you must approach them and ask them why your application has been rejected. Typically, a personal loan application can be rejected for the following reasons –
- Low credit score
- Incomplete documents
- Not fulfilling eligibility
- Applying for a higher amount than you are eligible
- Too many job switches
Ensure you know the exact reasons for the application to take the next step.
- Review your credit score
The low credit score of the applicant is usually the main reason for rejections. Before re-applying, ensure that you review and evaluate your credit score. You might have a low credit score, or there could be discrepancies in your credit report. If it’s the latter, ensure that you contact the credit bureau and rectify the mistake. Or else, take steps to improve your credit score before proceeding. You must clear all your debts, and maintain a low credit utilization ratio and debt to income ratio. Also, you must ensure to pay your credit card bills on time.
- Look for alternatives
It is usually not advised to re-apply immediately after your personal loan application is rejected. It can lower your credit score and reduce your chances of future loan approval. However, if you need funds urgently, you can look for other options. You can opt for secured loans like loan against property or gold loans. Meanwhile, you can identify the cause of rejections and take steps to rectify them. Once you have sorted out the issue, you can make a fresh application for a personal loan after a few months.
- Evaluate your documents
Incomplete documents often lead to rejections. Even a small spelling mistake can make the lenders deny the application as they could face problems in doing their due diligence. Review your documents and recheck them. Ensure that your details like address, name, etc., have been written accurately. Also, check if you have furnished all documents required for personal loan.
There could be diverse reasons for loan rejections. If your personal loan eligibility is the cause, you can opt for a joint personal loan to enhance your document and improve the chances of loan approval. Use these tips to ensure that your application is approved and fulfil all your dreams with a personal loan.