Personal Loan Simplified
Personal loans are much preferred by borrowers for their ease of application and approval. These are unsecured loans that can be availed without a collateral or restriction on its end-use. One can use the funds from personal loan for any reason whatsoever as the amount is not bound.
Though most personal loan applications meeting the eligibility criteria are approved without much hassle, some applications may get rejected for any number of reasons. These reasons could be either one or a mix of any of the following, a default in credit history, a poor credit score, low income, unfavorable debt to income ratio, unstable employment history, and more.
If your personal loan application gets rejected, do not get disheartened. You can always reapply for the personal loan once you know the reason for the rejection and fix it.
Steps to Take If Your Personal Loan Application Gets Denied
Step 1 – Find out the reason for loan application rejection
Unless you do not know the reason of your application being rejected, you can’t do anything to fix the issue. Lenders usually provide the reason for loan application rejection along with a loan rejection letter. Some of the most common reasons for a personal loan application rejection include:
- Poor credit score
- Insufficient income
- Unstable employment history
- Default history
- Incomplete documentation
If your loan application rejection reason doesn’t fall into any of the reasons stated above, you can always check with the lender and ask for more details. This step is very important to make sure that you improve on the denial clause and prepare to re-apply for the loan.
Step 2 – Recheck your credit score
Credit score is the first thing lenders see when they evaluate your loan application. This is the most common reason behind your loan application getting rejected or approved. Once this check is fulfilled, the lenders move forward to check your income and other criteria.
This confirms on the fact that a credit score is the most important tool and a catalyst to determine the fate of your loan application outcome.
Applicants with a good credit score (750 and above) are immediately moved forward to the next step of the loan application process. However, if your credit score is less, you can always take significant and easy steps to improve it. For that, you need to access a detailed copy of your credit report and read it properly to understand the reason behind a low credit score.
Apart from that, if your credit report has errors, you can take them up with the respective credit bureau to get them rectified.
Step 3 – Check your debt-to-income ratio
The next step is to check your debt-to-income ratio to know if your loan application is rejected due to low income. If this is the case, you can reapply for the loan with a reduced loan amount in case the initial amount you applied for was higher with respect to your income. You can even look out for the lenders who offer personal loans for people with lower income.
Also consider clearing off your old debts to elevate your income ratio and reapply for the loan.
Step 4 – Check for the required documents
One of the major reasons why personal loans are preferred over any other form of credit is because of its minimum document requirement. Most lenders only need a few basic documents to process your personal loan application. Documents required for a personal loan at Clix Capital are:
- Duly filled application form
- Recent passport size photograph
- ID Proof
- Address Proof
- Income Proofs: Bank statement showing salary credit / salary slip
If your loan application got rejected due to inadequate documentation, check for what was missing. You can always reapply for the loan with a fresh set of required documents after getting them in order.
A personal loan rejection is not the end of the road; take it as a blessing in disguise to be better prepared for your next application. If you’re still struggling while securing a personal loan, tap here to check your credit score and know if you’re eligible for our select pre-qualified personal loan offers.
Feel free to write to us at email@example.com or call us on 1800-200-9898 to know more about Personal Loan from Clix Capital