Rejections in life are usual. Right from school and college admissions to rejections in relationships are common. Add to it the burden to facing rejections on loans, a personal loan of all the loans.
A personal loan could be utilized for a host of reasons like a medical emergency, an unplanned vacation, funding a down payment for a bigger asset , buying a gadget or anything at all. This is the only loan which requires no collateral and the usage could be for any purpose.
Unfortunately when a financial institution rejects a loan application, it is under no obligation to specify reasons for rejection. Therefore, the onus is on the applicant to get his act together before applying for the loan again.
Additional Reading: Personal Loan Application Process
In such a scenario, an individual is totally clueless on how he/she can ensure that the loan application goes through when you re-apply. We bring to you a 5 things to consider when you before you re-apply.
1 . Mend your credit score : Credit score is something akin to a good horoscope in our country. Like many weddings do not happen due to bad horoscopes, a bad credit score is a simple way for loan rejections. No lender would like to lend money to an unworthy borrower. So if you had not checked your score in the first instance, do check your score here. Only when you have a good score, approach your lender again.
2. Pay attention to your credit mix : A credit mix is a combination of the types of credit that you have. Lenders look for a right mix of secured and unsecured loans. What if you have only credit cards or personal loans in your credit basket and look to add more unsecured elements to it. The answer is quite obvious here. Such applications are rejected. So before re-applying it would be good to go through Credit Health Report and take suggestions on how to improve your credit mix.
3. Be regular with your repayments : Credit score and repayments go hand in hand. Your earlier delayed repayments bear a negative influence on your credit health. Start making regular repayments on all your existing loans and credit cards.
4. Avoid Credit Hungry Behavior : Avenues to credit have opened up in the recent past. But that does not mean that you can fund all your expenses through credit. If you have been applying to a lot of loans and cards in the recent past, it definitely goes on to picture you as someone living out of your means. If you have been rejected a loan once, be very careful with the kind of applications for credit. Approach a lender only when you genuinely need credit.
5. Explore other Short-Term loan options : If your need for a personal loan is immediate like for a medical emergency etc. then you could explore other short-term loan options here. You could also consider exploring option of availing a loan against gold. These options may be worth exploring as they are available with a lesser credit score and are much faster in disbursements.
Loan and credit card rejections definitely affect you negatively. To avoid such situations it is always good to keep monitoring your credit score and remain credit healthy.