3 Common Reasons Behind Personal Loan Rejection

One of the most compelling reasons for the popularity of personal loans is their lightning-fast approvals and similarly swift disbursals. In a vast majority of cases, all that the lender needs is your identity proof, the proof of your income as well as your credit report, preferably with a score of 700 or above, and you are all set.

Once the lender receives the documents, they are quickly verified, and if everything checks out, your personal loan application is approved. However, like everything else, even the approval of Personal Loan applications are not without some exceptions.

Sometimes, due to some minute errors in your application, or due to certain discrepancies, you can be robbed off of the pleasure of procuring the much-desired funds through this loan type. To steer clear from this disheartening situation, we recommend you take a close look at the below-mentioned reasons for Personal Loan rejection and try to avoid them at all costs.

1. Low Credit Score

If you are in the process of procuring a loan, we are sure you must know about the significance of credit score. If not, let us tell you, that credit bureaus rate you on a score of 300 to 900 based on your history of credit repayments, whether they are on the basis of your Credit Card bill payments or on that of the equated monthly instalments (EMIs) you pay towards various loans such as car loan, Home Loan or others. While a score of 500 or above is deemed acceptable, only a score exceeding 700 will make you truly eligible for a Personal Loan.

A great way to ensure that your credit score is in line with the lender’s expectation, you must make sure that your repayment history reflects a commendable financial discipline. Not only will it help formulate the trust of the lender in you, but will also help speed up the process of your approval.

Then again, a good idea to have the know-how on this front is to order a free copy of your credit score before applying. This will help you evaluate the situation more efficiently, while also letting you know if you should wait for a few months and build your score, to improve your chances of approval.

As far as boosting your credit score goes, we recommend you ensure timely loan repayments, pay your Credit Card bills in full, and pay off all your existing debts before filing your Application for a Personal Loan.

2. Incomplete Documentation

Yes, this is yet another hurdle that can stop you from getting approval on your application. Hence, it is in your best interest to pay heed to the application guidelines and request the lender to help you with a comprehensive checklist beforehand.

Of course, this process can be a lot easier when you borrow from a customer-oriented service like Bajaj Finserv Personal Loan, wherein you need minimal documentation.

In fact, these documents can be easily submitted online, without the need for you to visit the branch physically, thus saving your precious time and efforts. More often than not, with such a proficient lender on your side, you can expect to receive the disbursed loan amount in as little as 24 hours.

3. Unstable Income

Apart from your repayment history, the only way for a lender to be assured of regular payments from your end is to analyse your monthly earnings. If you do not enjoy stable employment, or your business or practice is not bringing in regular revenues, your application might face rejection.

Hence, make sure you apply for a loan, only when you have a stable job, and a proof to show for it. If you have a business or are a self-employed professional, you will need to offer your bank statements as well as income tax returns as proof of your income. In the absence of continued employment, you must show other sources of income in order to assure the bank of your ability to repay. This can include rental income, income from interest pay-outs, and allowance from parents/guardians.

We hope that you are now aware of some of the mistakes you may make when you apply for a Personal Loan, and how you can avoid the same. So, wait no more before you finally push in that application, and get the necessary loan amount to fulfil your financial obligations.