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Whenever individuals apply for a loan, the lending authorities judge their ability to repay the loan depending on various factors. These factors include the borrower’s age, income, borrower’s job stability and primarily their credit report. Here are some reasons why your loan request can be turned down.
Creditseva’s DIY tool that will enable you to take financial decisions. By taking suggestive actions, you will be eligible for new credit cards and loans from various banks. You can also improve your credit score and get eligible for new credit card and loans. Therefore having a thorough reading of these reasons for loan rejection will help you in properly planning for every aspect that counts for a loan application to get approved.
Reasons Why a Loan Gets Rejected
1. Many Loans Previously: If it has come to the notice of the lender that you have taken many loans previously, then there are chances that your loan will get rejected.
2. Persistent Job Hopping: It is very important for a borrower to maintain job stability, because if you are a job hopper, your loan will be rejected for sure. So if you do not want your loan to get rejected, you should always stay away from job hopping.
3. Opting For a Joint Loan with sister or friends: If you are planning to take a joint loan with your friend or sister, it is for sure that your loan request will get rejected. This is so because banks do not allow joint loans with sisters or friends. However, joint loans with brothers or parents are usually approved.
4. Being a Loan Guarantor to A Defaulter: Whenever you are planning to become a guarantor, you have to be extra cautious, because if you are a guarantor for those borrowers who are loan defaulters, it will create a bad impact on your credit profile.
5. Previously Your Loan Was Rejected: If your loan application has been rejected earlier, it gets recorded in your credit profile and this data is present with the banks and lending institutions. In this case, if you have re-applied for another loan, and then there are complete chances of your loan getting rejected.
6. Poor CIBIL Record of Co-applicant: You have to carefully choose the co-applicants of your loan. If any of your co-applicants has a poor CIBIL Record, then there are chances of your loan application also getting rejected.
7. Same residential address as of the defaulter: If your residential address matches with the residential address of a loan defaulter, then your loan will surely get rejected.
8. No Demonstration of Savings: If you are an individual who has applied for a loan and is unsure that the loan application might get rejected, then the first thing you should be cross-checking is that you have shown the bank all the details about your savings. This will enable the bank to approve your loan.
9. Changing Permanent Address: If you are an individual who keeps moving from one place to another, then there are chances that your loan application will get rejected.
10. Falsified Documents: Your loan application will get rejected if you have provided the bank with your documents that are falsified. Falsified documents imply that you are trying to hide something from your lender.
11. Making Frequent Queries: If you have made frequent loan queries, you will be considered desperate from the lender’s point of view. This is another factor that affects your loan application.
12. Avoiding Verification Calls: If you have been avoiding verification calls that are made to you while your loan application has been made, then there are chances of your loan getting rejected.
Steps to Be Taken When Your Loan Has Been Rejected
Here are few steps that you should be taking when your loan application has been rejected. By following these steps you can stay assured that the next time you apply for a loan, your loan will not get rejected.
1. Reason for Loan Rejection: The very first step to finding a solution to any problem is identifying the root cause of the problem. In this process, certain questions will come to your mind like what factors lead to my loan getting rejected? You will be required to find answers to these questions. It is not tough to find out answers to these questions, because the lending authorities need to always mention the reason for rejecting a loan application.
2. Loan Rejected Due To Poor Credit Report: If this is the main reason for the rejection of your loan, you should get a free copy of your report from any of three major credit bureaus. By doing this, you will able to analyze your report carefully and understand the factors in your Credit Report that have led to the rejection of loan.
3. Correct the errors: A borrower, who is willing to get his loan application approved, should see to it that the minor errors that lead to loan rejection have been corrected.
4. Opt for another Opinion: It is always better to go for a second opinion after the rejection of your loan application form one lending institution. After making corrections in the credit report, the credit bureaus send the copy to the lender. You can also contact the lender and ask them your queries mentioning that you require a second opinion from them.
5. New Loan Application: You can always request for a new loan. It is advisable not to get bogged down or discouraged by the rejection of any of your loan.
It usually happens so that a borrower has done everything right, but even then you are left analysing the reason for the rejection of your loan application. It is a very frustrating feeling to see your loan get rejected, especially when you were very much in need of it. So, before approaching the other banks for a loan, you should make sure you have all things done in a proper manner.
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