Raju has gone through several not-so-nice experiences with personal loans in the past. He remembered how he heard about some steal deals on personal loans by country’s biggest lenders and applied. Alas, he faced rejection on both the occasions. He could not understand what he was doing wrong. He was working in a private firm. He had a good employment history. He did not have any outstanding loans or other such financial commitments. Each time he tried to delve into the matter to resolve the issue (whatever it was), he was provided with so much mundane information he knew he was never going to sift through.
Aren’t most of us familiar with Raju’s plight?
For almost all of us, personal loans, or emergency loans as some like to call them, are the last resort when caught in a financial turmoil that requires quick attention. And when it is denied for unknown reasons it is no wonder we feel lost and distressed. This blog specially focuses on different factors regarding personal loan rejection and how to avoid them.
Let us take it one step at a time and try to bring some clarity on this.
- CIBIL Score
Though many don’t even know what a credit score is, it plays a significant role in deciding your loan-destiny. Almost every bank demands a credit score of 700 and above. But now there are some Fintech startups that offer quick personal loans in Bangalore for those who have a CIBIL score of 625 and above.
- False or Mismatching Documents Submitted
When folks are in dire need of cash, it is not unheard of to go berserk and submit fake docs like salary slips to pass the eligibility criteria. However, it is not a cakewalk to fool the bank officials, unless you are some big shot industrialist. They are quite familiar with the ways of wayward clients. The minute they spot some mismatch, your data will be sent to all the listed banks in the country. You will no longer be eligible for any loan in near future.
- Repayment Capacity
Lenders are wary of applicants with too many dues. You may be confident that you can manage to pay the EMIs. But there is an unwritten rule that only 40 percent of your income can be used to pay bank instalments.
- Nothing is Trivial
Your personal loan application can be rejected for reasons that can leave you gobsmacked. It could be something as small as you postponing an office/residence address verification visit.
- Having no loans or credit cards in your name so far
In a perfect world, this should be considered a good thing. It shows you are capable of living within your means. But as far as a lender is concerned, this is a cause for concern because they have no data available to gauge your repayment capacity.
- Your Personal Profile
You need to achieve a certain customer profile score too to be considered. This varies from bank to bank. In short, they scrutinize your income, familial status, housing stability along with earlier financial accounts.