Application for a personal loan may sometimes seem easy, and sometimes the rejection can leave one with a feeling of disheartenment, not knowing the reasons for that.
In this guide, we shall explore ways to respond when your personal loan application is denied due to bad credit
scores.
We have learned from why it occurs to a few tactics that may aid in raising one’s credit score to become
closer to loan approval.
Understand the Reasons for Your Personal Loan Rejection
Before proceeding, you should find out why the loan has been rejected. Your lender should provide their reasoning and some specifics for you to know what is wrong and what needs adjustment for the next application. Low credit score tops most of those lists, but other reasons may include:
- Lower Than Ideal Credit Score: Your credit score may be between 680 to 720, which can already
be good enough; yet to most lenders, risky when used on huge quantities of loans. - High Outstanding Debts: For instance, if you have high debts, lenders may not grant one credit
because of potential hassle during the repayment process. - Irregular Employment History: There are lenders who also believe in stable employment. There is
a trend now towards consistent income streams and predictable earnings.
By understanding these factors, you can develop a targeted approach to address each issue.
Check Credit Score
A credit score of 680-720 should be an eye opener to improve your credit worthiness. Here’s how to improve your
credit score:
- Check for mistakes in the credit report: Your credit report may carry errors that can lower
your score. Go through the report and correct all the inaccuracies. - Pay bills on time. It is one of the essential factors in your credit score. You may need to set
reminders or use automatic payments to ensure you are making payments on time. - Pay down outstanding debt. You can pay off the amount of debt you have by paying it down.
Prioritize paying off high-interest debt to reduce your outstanding obligations.
Over time, these efforts will help improve your credit score and make you more attractive to lenders.
Rethink the loan amount
If your loan is rejected, then you can consider applying for the same amount or apply for a lesser amount. The loans
of up to Rs. 50,000 are bound to be approved with a moderate credit score.
For example, taking a small loan through RupeeQ, which has many loan products on its platform from different lenders;
the possibility of getting a lending institution to grant you your loan at an appreciable rate is quite high.
Small loans can even improve your chance of being reported as being responsible financially in making the repayments
while keeping track of payment, hence the more likely of improving the score and subsequently increasing one’s
chances at getting more considerable loans over time.
Use RupeeQ for Comparing Loans
The best way to increase chances of loan approval is through comparison of offers from several lenders. RupeeQ
platform gives you access to a wide range of personal loan options from leading financial institutions, allowing you
to find loans that suit your credit profile and financial needs.
Why RupeeQ?
- Multiple Options in One Place: RupeeQ partners with various financial institutions, allowing
you to compare offers in one location. - Personalized Loan Deals: You can filter your search to the type of loan deal you need, whether
by amount or repayment tenure, so that you find a lender who can work with your credit score. - Information for Borrowers: The platform from RupeeQ offers knowledge on what lenders require to
process an application so you know where to strategically place your application.
Apply for a Short-Term Loan and Pay Off Early
If you are seriously interested in improving your credit score, take a small loan amount. You can go for amounts up
to Rs. 50,000 and must pay it on time as well. It will provide evidence to lenders that the borrower is not
irresponsible to the lenders.
Here is how:
- It builds the credibility with the lenders: When you are repaying smaller loans, it indicates that you can
handle your credit responsibly. - Your Credit Score Improves Gradually: Each repayment that comes on time is posted as a plus in the credit report, and such activities over time help enhance your score.
- Increases Chances of Getting Loans Approved in the Future: You can have better offers for loans by creating a good repayment history with smaller loans even if your original score was between 680 and 720.
Do not apply for multiple loans at one time
It is pretty easy to apply for other loans once your loan application has been rejected. Applying for several loans
in a short time, however, will not help because it is a sign that lenders perceive you are desperate with your
finances.
You must take some time and improve your credit profile by bettering your credit score and financial
habits before applying again.
Use RupeeQ’s Pre-Approval Check: If you have the facility, use RupeeQ’s pre-approval feature to check your eligibility without affecting your credit score.
Be Patient and Stay Disciplined
It does not take overnight efforts to improve credit scores and loan eligibility. It is a consistent process that
demands disciplined repayments and responsible financial habits. Though it may take some time before you see an
improvement, the results will help you gain access to more lucrative financial products and better loan offers in
the future.
It takes these steps to help enhance loan approval chances and further toward long-term financial well-being.
In a Nutshell
It can be depressing to find that a poor credit score has led the lender out rightly to decline a loan, but sure
enough, it does not have to be the last word of any loan ride. Learning your reasons and staying on the move helps
you make it closer and closer towards achieving any desired loan.
You may weigh less costly loans, mend your habits of credit culture, or use platforms such as RupeeQ for the cause.
You may get lenders on a platform like RupeeQ who will be willing to give you loans according to your financial
profile. So, if your personal loan application has been declined, consider that as a learning process and follow the
above tips and strategies before you make an application after getting well-prepared for it.
Developing good financial habits and having some patience may bring you desired approvals for loans in the future.
