Why can your personal loan application be rejected?
Life situations can be unpredictable. Sudden and unexpected expenses or an occasion or a medical emergency can catch you off guard and can cause you stress. On such occasions, personal loans can become your savior big time.
Personal loans are unsecured loans that can be availed from financial institutions. While availing personal loan is easy & quick, many applications get rejected due to various reasons. Let’s discuss about these important factors that can lead to the rejection of your loan application.
- Too Many Loan Enquiries
Every time you apply for a personal loan, the credit bureau receives an enquiry for your credit score from the financial institution. These enquiries get registered as a record in your credit report. Multiple enquiries imply that you are a credit hungry person and may not be able to manage your finances properly or may not be able to repay your loan; thus, negatively impacting your credit score too. So, instead of applying simultaneously to many places, it’s best to do some research on loan offers, compare them and then decide and apply.
- Too Much of Debts
If your pre-existing debt is higher then this can also lead to rejection of your loan application. For instance, if you are already serving a heavy loan or credit card debt, these are considered as open credit lines and that you may default on the payment as you have higher financial obligation to repay. Hence, the best thing to do is first close the existing loan and then apply for a new one.
- Too Low a Credit Score
Credit score is a like a credit ranking given by credit bureaus based on your credit and repayment history. It ranges from 300 – 900. Higher score means good prospect for lending and vice versa. A credit score of 750 or above is an ideal score to avail a personal loan quickly. While there are lenders who may consider an application with lower score too, but in most cases, lower score is the reason of rejection. To maintain a good credit score, it is important that you keep your finances in order, make your payments on time and not default on any.
- Unstable Employment History
Having a stable employment record is one of the important criteria of availing a personal loan. If you have been hopping jobs often or quitting multiple times, it may get your loan application rejected. People with such employment track record are often considered unreliable. Even if lenders consider their application, they may end up paying higher interest rate than otherwise.
- Annual Income Eligibility
Lenders usually define their lending criteria and mention the minimum income requirement too. if you apply for a personal loan which is higher than your eligibility criteria, it may get rejected. It’s best you first study the terms and requirement before applying to avoid any rejections.
MYFI is one of the best lending platforms for online personal loan. We make it easy to apply and avail a loan. Please read all the criteria before applying for a loan with us.