Did you know the pain of being rejected by your crush is equal to the pain of a rejected loan?
Think about it, in both cases, you have a lose-lose situation. Not only do you feel hurt by rejection, but you also have to bear the consequences of it.
In case of your crush’s rejection, everyone knows you got rejected but in the case of a rejected loan, other lenders who you may apply for a loan with will know that your application was rejected and your credit score suffers.
Reasons why your Instant Cash Loan might get Rejected
1. Low Credit Score
Your credit score represents your creditworthiness and trustworthiness. Having an excellent credit score is essential to avail of any type of loan. The lower your credit score is, the harder it will be for you to avail a loan. Factors like poor repayment history, too many hard checks, and missed EMIs bring down your credit score.
A credit score below 500 is a red flag for the lender, who may hesitate to approve your loan. Even if your loan is approved, the lender will charge high interest to cover the risk of you defaulting on your loan.
2. High Credit Utilisation
If you have a credit card and you spend above 30% of the total credit limit, that is considered high credit utilisation. Applicants with credit utilisation below 30% stand a better chance of getting approved for loans. Having high credit utilisation is one of the reasons your loan application can be rejected. It is best to keep your credit utilisation below the stated percentage to maintain a good credit score and lessen the burden of debt.
3. High Debt-to-Income Ratio
Lenders use the debt-to-income (DTI) ratio, which is the ratio of your gross monthly income to your existing monthly debt, to assess your borrowing risk. A high debt-to-income ratio gives a bad impression to the lender and shows that you’re struggling to pay off your existing debt. If you have a DTI above 35%, lenders will hesitate to approve your loan application.
4. Insufficient or Unstable Income
Your income is one of the important factors that lenders consider when checking your eligibility for a loan. Lenders assess your income to determine if you can afford the monthly EMIs to repay the loan. If your income is insufficient or unstable for the loan amount you wish to borrow, the lender might reject your instant cash loan application.
5. Incomplete Documents
Imagine you apply for a loan at a bank, endure the long queues and lunch breaks, move from counter to counter and finally file your application with the necessary documents. A few days later when you thought your loan must have been approved, the bank informs you that due to insufficient documents, your loan was rejected. Do you feel the frustration already?
Incomplete documents are the most common reason why loans are rejected. They cause unnecessary delays and rejections which add to your troubles when you are in need of money. Even if you apply for an instant cash loan online where less paperwork is involved, your loan application will be rejected if documents like salary slips and IDs are missing. That is why it is crucial to provide the right and complete documents to get your loan approved.
6. Multiple Hard Enquiries
It is human to feel desperate when you need money urgently but applying with multiple lenders will only lessen your chances of availing of an instant cash loan. Lenders carry out a hard credit check and having multiple hard enquiries during a short period can significantly hurt your credit score.
Here’s what you should do instead: Find out the eligibility criteria of various lenders and check if you match their requirements. Select one lender you’re positive will approve your application and apply for a personal loan. This will minimise the damage to your credit score due to hard enquiry.
Personal Loan Rejection and Its Impact on Credit Score
Personal loan rejected? Well, be aware that it can lower your credit score. Each time a loan is denied, it actually reflects on your credit report, and this makes it look like you are a risky borrower. Consequently, this can make it harder to get loans in the future. If you want to avoid this, then make sure you meet the loan requirements before applying.
Also Read: How to Check Your Credit Report for Free?
Tips for Improving Personal Loan Eligibility
- Pay your bills on time and keep your credit card balances low to keep your credit score high.
- Pay off some of your current debts to improve your debt-to-income ratio.
- Make sure you have a steady job and a regular income.
- Always provide all the necessary documents when applying for a loan. Missing documents could be a potential reason for personal loan rejection.
- Never apply for too many loans at once.
Conclusion
So, this is how you can fix the issues and improve your chances of getting approved for an instant cash loan- manage your debts, have a steady income, and ensure you meet the lender’s requirements. This would help you secure the funds you need without hurting your credit score.
Download the CASHe loan app today and get your instant loan approved quickly!
FAQs
1. How will I know if my personal loan application is rejected?
The lenders usually inform you via email or call if your loan is rejected. They might also tell you why it was rejected so that you can fix any problems before applying again.
2. What to do after my personal loan rejection?
Loan application rejected? The first thing you need to do is find out why. Check your credit score, pay off some debts, gather all necessary documents, and make sure you meet the lender’s requirements before applying again.
3. Can I apply again after my loan rejection?
Yes, you can apply again. But make sure to fix the issues that led to the rejection and wait a few months before reapplying.
4. How to avoid personal loan rejection?
To avoid loan rejection, keep a good credit score, manage your debts well, have a steady income, and provide all necessary documents.
5. Will loan rejection affect my CIBIL score?
Yes, loan rejection can lower your CIBIL score. Multiple rejections can make it harder for you to get loans in the future. Hence, it is important to apply only to lenders whose requirements you can easily meet.
