Common Reasons For The Rejection Of A Loan Application
When looking to cover unexpected financial emergencies, it might not be sufficient to depend only on your savings. Hence, you might have to look for a personal loan in such a situation. When applying for a loan on a personal loan app, the biggest challenge you might encounter is the rejection of your loan application. There are many reasons why your loan application might get rejected. This article will help you learn about the common reasons for a loan rejection to avoid one.
Common Loan Application Rejection Reasons
Listed below are the common reasons why the loan application of a borrower might get rejected on a loan wala app.
1.Low credit score
A borrower’s credit score is a number that falls between 300 and 900, representing the creditworthiness of an individual. Basically, the lender holds a particular credit score to get their loan approved. Therefore, your loan application only gets accepted when your credit score stands above the eligibility threshold of the bank. In case you do not have any credit history, even then, your application might get rejected. This is why it is essential to maintain a credit score of at least 750 or above by making all your loan instalments and bill payments on time.
2.Multiple inquiries and loan applications
You can apply for a loan from different lenders; however, this might be a drawback. As your online loan app inquires about your credit score before offering you the loan, the credit bureau will show them that you have applied for a loan to several lenders, making you look distressed, which might question your credibility and result in your loan application being rejected. This is why it is advised to inquire about and apply for a loan only from a single lender at a time.
3.High amount of debt at present
Your loan approval on an online loan app might be stuck if you are already holding a high loan amount. If at present, you hold several credit accounts such as credit cards and loans, the lender will picture you as burdened with massive debt. Due to this, you might be a risky borrower for the lender, and your loan might get rejected.
4.Not fulfilling the income criteria
Before approving your loan application, the lender needs to ensure your repayment eligibility. They examine the income of the borrower as part of the eligibility for the loan. With a stable income, you are capable of repaying the loan on time. However, if there are chances of your loan application getting rejected on this criterion, contact the lender before filling out the application.
5.Incorrect or missing documents
Your loan application only gets approved after the verification of your documents. If any of your loan documents are missing or include inconsistent information, there is a chance that your loan application might be rejected. All the documents, including the application form, are crucial for your loan application. Also, all the details of your loan are utilised by the bank to generate the needed information regarding your loan.
Conclusion:
When applying for a loan on an Indian loan app, make sure to consider all the rejection points given above, and also ensure that to avoid getting stuck in any of them to get your loan application approved. In case of any other doubts about your loan application approval, ensure to contact your lender and discuss with them all the eligibility criteria points before filling out the form.