Many personal loan
applications get rejected as loan applicants are not able, at times, to fulfill the stated requirement criteria. You should check the following points before applying to a particular personal loan
provider and to improve your chances of getting a personal loan.
Check your credit score
If you are not mindful of your credit score while applying for a personal loan, your loan application might get rejected. Even if your loan application gets approved somehow, you may be asked to pay a higher personal loan interest rate and may be offered unfavorable terms and conditions when you apply for personal loan, as compared to those borrowers with excellent credit scores.
Obtain your credit report, to identify your credit score and rectify errors, if any. You should take care to pay all your dues on time as your payment history takes care of 35 % of the credit score. A decent credit score can boost your chances of loan approval a great deal.
Have a check on your outstanding debt
Along with your income, your debt-to-income or DTI ratio gives an important account of how much your affordability is for borrowing a personal loan. It also indicates to the lenders whether you can pay the personal loan amount every month and whether you are responsible enough in handling your money.
A high DTI percentage shows that you are using a considerable part of your income to pay your existing debts. Hence, check your DTI and if it’s over 43 %, consider paying off some of your existing debts.
Provide truthful information
Personal Loan providers verify the information provided by you through supporting documents. They may possibly give you a call to verify your information personally. Therefore, you must provide factual information about your residential details, annual income, past loan repayments etc.
Aim for a realistic loan amount
Often, many borrowers apply for an extremely huge amount which is mostly rejected by the lender. It is crucial to recognize how much you need to borrow. Most lenders conduct a check of your income and repayment ability before approving your loan. Thus, aim for a reasonable amount in order to avoid loan rejection.