Posible Reasons For Personal Loan Rejection Must Read
Posible Reasons For Personal Loan Rejection: Was your Personal Loan application rejected again but you aren’t sure why? There are a number of reasons why loan applications are usually rejected by lenders. But don’t worry, there are a handful of things you can do to improve the chances of your loan being approved.
So, if your bank turned down your application lately, it could be due to any of the reasons listed below.
So, if your bank turned down your application lately, it could be due to any of the reasons listed below.
Constant job hopping
Unstable employment is another common reason for rejection. Lenders value job stability a lot as it is a sign that the borrower will be able to pay his/her dues without fail. So, if you have been changing your job every six months or the like, your loan application will find its way into the rejection pile. Nowadays, most lenders have placed conditions such as ‘at least one year in current job’ or ‘two years of total work experience’ as their eligibility criteria. And individuals who do not meet the requirement stand a higher chance of loan rejection.
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Too many loans
Knee-deep in loans already? Your lender may reject your current application. Wondering why? If you’re holding several loans, then lenders will need to check whether your income is sufficient to support the new loan’s repayments. Your debt to income ratio is very important to lenders.
Too many applications/rejections
Did you know that each loan application and rejection gets recorded on your credit report? Each time you apply for a loan, the lender will approach your credit bureau for your Credit Score and credit report. And your credit bureau will consider this as a ‘hard inquiry’. So, the more number of applications that you make, the more will be the number of hard inquiries, and this will bring down your Credit Score too.
Poor credit history
Have you been paying your existing Credit Card bills and loan EMIs on time? If you’ve defaulted on payments, then you are likely to have a low Credit Score and negative remarks on your credit report. And a poor track record of repayments is a strong reason for lenders to reject future loan or Credit Card applications. Also, if you have a thin credit history, there are chances that lenders will turn down your application. A thin credit history means that you do not hold any financial products – i.e. Credit Cards, loans. Hence, lenders cannot assess your financial behaviour, and therefore, are hesitant to sanction your loan.
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Too many loans
Knee-deep in loans already? Your lender may reject your current application. Wondering why? If you’re holding several loans, then lenders will need to check whether your income is sufficient to support the new loan’s repayments. Your debt to income ratio is very important to lenders.