Personal loans are one of the easiest ways to secure short term finance when there is a dire need for money. You can use a personal loan to fund your education, marriage, home renovation, travel, or medical emergency. This instant loan helps meet immediate financial requirements.
Although personal loans are easy to acquire, you could face rejection due to several reasons. The best defense against personal loan rejection is to familiarise yourself with the application process and what it takes to increase your chances of being approved.
Here are a few things you may want to consider before applying for a personal loan that can help minimize your chances of loan rejection.
Consider These Tips To Avoid The Loan Rejection
Apply with good credit score-
Your credit score plays a crucial role in getting your personal loan application approved. It reflects your creditworthiness and helps lender access the risk of default. A score of 750 and above is considered ideal to getting approved for a personal loan. You can boost your credit score by avoiding late payments of EMIs, clearing outstanding debts, and preventing overuse of your credit card.
Avoid multiple loan applications in a short period-
Too many loan applications in a short span are viewed negatively by lenders and it could also impact your credit score. Lenders could perceive you as credit hungry and a high-risk candidate. To avoid this situation, you may want to research thoroughly and compare all the options in advance.
Check minimum income requirements-
Before you apply for a loan, it is wise to access the minimum income requirements defined by the lender. If you apply for a loan amount, more than your eligible income criteria, your loan application is likely to get rejected. Moreover, a steady source of income acts as proof to the lender that you are capable of repaying your loan. If you want to secure a personal loan easily, you may want to talk to the lender regarding minimum income requirements before making an application.
Limit your existing outstanding debts-
Your loan application could be rejected if your debt-to-income ratio is on a higher side. Too many outstanding debts are considered risky by lenders. This is because they consider you may be over-burdened with credit and end up in default. Therefore, if you currently possess too many open credit lines such as credit card bills or other existing loans, it is advisable to repay some debts and apply for a new loan.
Carefully verify documents-
It is advisable to double check your loan application as submitting incomplete or faulty information could result in loan rejection. Read the loan application guidelines carefully and adhere to the document checklist before making a loan application.
Ensure you fall in the right age bracket-
To qualify for a personal loan, you must meet minimum age criteria of 21 years and maximum of 60 years. Lenders set an age limit to receive assurance on loan recoverability.
You can use the above tips to avoid common mistakes that typically lead to personal loan rejection. If you are looking for a personal loan, you may browse through personal loans from Bajaj Finserv. It offers numerous benefits such as lower interest rate, higher loan amount, flexible repayment options, easy documentation, and online loan app facility. Bajaj Finserv app is simple, easy to use, and handy which makes it one of the best loan apps in India. It also allows you to apply for various pre-approved offers on personal loans, home loans, business loans, and a host of other financial products. Just by sharing a few basic details, you can not only check out your pre-approved offer but also save your time and efforts.