It is a well-known fact that Personal Loans are often the easiest to acquire. All you basically need is a reasonable credit score, complete with a source of steady income, and more often than not your Personal Loan application will get approved within a couple of days. However, there are instances where you apply for a Personal Loan, and get turned down. This usually happens due to one or more of the following reasons:
While the reasons may vary slightly from one lender to the other, especially concerning the minimum income requirements as well as age restrictions, they remain more or less the same. A great way to combat the rejection criteria is to get in touch with the lender before you Apply for Personal Loan to understand their eligibility criteria. That being done, you should then check, whether or not do you meet the requirements! If not, it may be in your best interest to find another lender.
Another aspect of this problem is ‘hard enquiry’. When you apply for a Personal Loan, the lender will first ask you to submit the required documents and will go on to verify them. If the lender is not satisfied with the paperwork, your application will be turned down, there and then. Such a rejection will not necessarily impact your credit score.
However, if the verification of documents is complete, and the lender is satisfied with the same, it will then get in touch with the credit bureau to know about your credit score and history. This check is known as a hard enquiry. If your score in the lower range, say less than 750, the chances are that your Personal Loan application will get rejected. If there are multiple hard enquiries on your name, it is highly likely that your credit score will suffer a severe blow.
To avert such a situation, it is best to apply for a Personal Loan to a bank of which you are an existing customer. More often than not, banks know and understand the financial health of their current customers, and hence approve the loan application with greater ease. On the other hand, a new lender will carefully scrutinise your financial standing, and will only approve your loan, if all aspects of your application, including your credit score, are genuinely compelling. If not, such a lender will not offer you the benefit of the doubt and reject your loan application outright. This is mainly due to the fact that a Personal Loan is unsecured, and no lender would want to risk a lump sum amount of money with someone they don’t entirely trust.
Yet another way to reapply for a Personal Loan, without impacting your credit score, is to wait for a period of at least six months before you file a new application. Firstly, this will give you ample time to work on the factors, which were earlier playing against you. You can use this time to improve your credit score, to get a raise or find a new, more stable source of income. Secondly, it will help you avert any suspicions from the bank, thus ensuring that your chances of getting an approval increase significantly.
We hope that you have finally found the apt answer to the question as to how frequently you can, and should apply for a Personal Loan, so that you enjoy a swift approval, without having any impact, whatsoever, on your credit score!
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