For any kind of financial emergency that you may have currently, a personal loan can be an easy solution that helps you meet your short-term goals. These unsecured loans don’t require heavy documentation or a cumbersome application procedure. These come with quick approvals, instant disbursals, and unrestricted use, making it easier for you to depend on them for any financial urgency in your life.
However, a rejection of your loan application can take a toll on your financial health. Your credit rating can dip, leaving you stranded with no financial help. Read on to explore the top three ways to follow to make sure your personal loan application is properly filed and the chances of rejection are negligible.
Top 3 Ways to Avoid Personal Loan Rejections
Let’s take a look at these tips and techniques to help you be vigilant while applying for personal loans.
1. Keep a Thorough Check on Your CIBIL Rating
A lower credit rating is one of the primary reasons for personal loan rejection. Your credit rating is built according to how you have handled your debt. If you have had a poor repayment history, missed or late payments, or other loans or credit cards, or if you have exceeded the credit utilization ratio of your credit limit, you may have to face the brunt of low credit ratings. Too many loan rejections or having a credit mix of unsecured loans can also adversely impact your credit rating.
So ensure you must constantly check your CIBIL rating each month. In this case, apps like OneScore deserve special mention for providing free-of-cost credit score checks around the year. These are the most popular credit rating agencies that financial institutions normally consider. Check for errors or inconsistencies and look for ways to enhance your rating. You can apply for a personal loan once your credit rating is at par, preferably 700 or above.
2. Make Sure Your Employment and Income are Stable
If you have limited sources of income, low earnings, or unstable employment or business, this deters the financial institutions from trusting you with a personal loan. The EMIs are high, and the loan tenure can vary from 36-60 months. You should be able to repay your personal loan without misses or glitches.
Ensure you apply for a personal loan only when you are confident that your employment or business has stable earnings. If you have multiple sources of income, you must have financial proof of your income so that you can document the same at the time of application. This gives the confidence to the provider that you have the potential to repay your loan.
3. Maintain a Good relationship with the Loan Provider
Not having any relationship with the loan provider or asking for a high loan amount with a short loan tenure can get you a loan rejection from financial institutions.
To encourage trust, transparency, and credibility, apply for a personal loan from financial institutions with which you already share a suitable financial relationship. This makes your application process easier, as the providers already know you and your financial standing.
Try and ask for a limited loan amount (one that you can easily repay) at a longer tenure, as it promotes a long-term relationship with the provider. This enhances their confidence in you, and you can get the benefit of instant approvals on your personal loans.
Rejections can be harsh, and they can harm your financial credibility. So do everything you can to avoid personal loan rejections and prioritize your emergency tasks.
Follow the top three ways mentioned above before applying for a personal loan to make informed decisions in the long run.