Wondering why your lender declined your personal loan application?
While personal finance offerings are popular due to their easy disbursement, collateral-free funding, quick approval, etc., lenders don’t approve every application. And even though a loan rejection isn’t the end of the world, it can impact your credit report negatively.
So what should you do if your loan application gets rejected? Let’s have a look.
Things to do if you are declined for personal loan
#1 Examine your credit report
Whenever you apply for a loan, the lending institutions meticulously review your credit report. That’s why before making a loan request, you must examine your report to find anomalies if any.
Now that your loan is declined check your report carefully to see if there are any inaccuracies. It’s a common misconception that conducting regular checks can lower your CIBIL score, but soft inquiries like these don’t impact your score.
Instead, finding any delays in updating your credit report or rectifying errors can improve your credit score.
Additional Read: Understand Why several Personal Loan Applications get Rejected?
#2 Incomplete paperwork
Lenders request a set of documents, including proof of your identity, income, employment, address, etc. You must submit the necessary paperwork transparently. This helps avoid any delays in document verification on the lender’s end.
Remember, a lender will always perform a complete background check on you before approving your loan, and if there is any discrepancy, consider your personal loan declined.
#3 Identify reasons for loan disapproval
If your loan application is rejected, even if you filled out the application correctly and provided the relevant documents, then your loan profile didn’t meet the lender’s minimum requirements. The first thing you must do now is identifying the root of the problem. Review the following factors crucial to your personal loan eligibility:
- Bad credit score
- Too many loan applications simultaneously
- Unstable or insufficient income
- Frequent job changes
- Limited credit history
#4 Boost your credit score
Your CIBIL score reflects your creditworthiness. Besides landing you competitive personal loan interest rates, a good score over 750 can also help you qualify for a bigger loan amount.
If your credit score is the reason your loan was declined, you can perk it up in a matter of months. Here’s how.
- Pay your credit card bills and EMIs on time.
- Keep the spending on your credit card limited up to 50% of the approved limit. This way, your credit report displays good spending discipline. However, don’t stop using your credit card altogether, as that can also lower your CIBIL score.
Additional Read: What Happens if a Personal Loan EMI is Missed?
The bottom line
Now that you know what to do to ensure your loan application doesn’t get declined, it’s time to find a trustworthy lender. If you are looking for competitive loan terms, choose Tata Capital!
We extend multi-purpose personal financing tailored to suit your needs. Furnish minimal documentation and avail of attractive interest rates, starting at just 10.99%. Moreover, you can use our personal loan EMI calculator to get hold of your repayment costs in advance.
So, wait no more! Apply today.