Being rejected for loans? Here’s how to become a smart borrower
Tired of having to face a refusal every time you apply for a loan? Experts say there must be something you are doing wrong. Note that being a smart borrower is not that difficult at all.
Rohit Garg, co-founder and CEO of Smartcoin, says, “You just have to play your cards right. Above all, we must underline the main causes of their failure to receive loans from financial organizations.
Reasons why your loan application is rejected
There are several reasons why your loan could be refused.
- An insufficiently low CIBIL score or credit score could lead to rejection of a loan
- You may have unintentionally provided wrong or invalid information to the lending party, for which during the process the loan application was rejected.
- There may be some errors or ambiguities in your loan application form
- You want to apply for a large loan amount that exceeds your current eligibility
- Failure to produce or submit documents necessary for loan approval, etc.
Here’s how you can secure loan approval every time you apply
Garg says, “Generally speaking, the current income status and credit rating of a loan seeker are the primary factors a lender considers before sanctioning a loan. However, that doesn’t reveal the whole picture, as other factors also come into play. “
It is also possible that a lender will refuse to grant a loan to an applicant on the basis of other aspects, which experts believe could be a poor work history, lack of stable income and problems maintaining flows. adequate cash flow or liquidity.
Here’s how to get approved for a loan;
Check beforehand if you meet all the necessary criteria for loan approval such as positive credit history, stable income etc.
One of the important points in loan approval is the CIBIL score. Garg adds: “You have to keep your CIBIL score well above 750 to ensure that lenders sanction loans. A bad credit score is linked to a bad image and can deter the lender from marking the loan application green.
Experts say borrowers should make an effort to rectify the gaps and errors in their credit report. This means paying unpaid contributions on time and avoiding point losses due to late payments or defaults.
Don’t file multiple loan applications as that doesn’t really help in any way. This not only looks spurious, but is also considered financial malpractice. Applying for a loan from multiple lenders will also lower your credit score.
That said, Garg adds, “With the changing times, a lot has changed. It is now possible to avail credit even with a low credit score. Many new-age lenders and financial technology organizations are creating waves in the financial sea by offering credit facilities to borrowers with bad credit on the basis of less stringent credit parameters. “
The pitfall of these loan options being that the interest rate charged is comparatively higher than that supposed to be used to qualify for credit with a fair, good or excellent CIBIL score.
Besides, there are other ways to borrow bad credit credit score as well – take advantage of someone with good credit score to apply with you as a true co-signer.
Garg says, “Having a co-signer improves your chances of getting your loan approved by lenders. There are other benefits to having a trusted co-signer as well. Enlisting a co-signer with an excellent credit history can help you get a lower interest rate even if you are qualified to get approval on your own.