Post Covid-19 pandemic, unsecured, or online personal loans have seen a drastic growth of around four times the bank’s credit. Several factors have fueled the borrowing in India. First, you can borrow personal loans online, but they are also more convenient due to instant loan approval, and the amount gets disbursed to your bank account within the same day of loan approval. Also, you do not have to provide any collateral or security to the lender. However, no matter how easy getting a cash loan online, your loan might get rejected. So now the question arises what to do if your loan application gets rejected?
Review the reason for your Personal loan application rejection
Review the reason for loan application rejection and gather the possible cause so that you can handle them in the future. Below are some possible reasons:
Lower Credit Scores: A Credit score or CIBIL score is a direct indicator of your creditworthiness based on your credit record. A low CIBIL score indicated low credibility to the creditor.
Insufficient Income: A steady source of income shows a fair chance of repaying the loan timely, whereas a low income weakens your chance of getting a loan.
Higher Creditutilization Ratio: A debt to income ratio is the ratio of entire monthly debt expenses to your gross monthly income. Generally, lenders prefer borrowers with a low debt-to-income ratio.
Incorrect Information: Any false details or differences in the information provided can make the lenders questionable, and the loan can get rejected.
Improve Your Credit Score
A CIBIL score ranges from 300 to 900. If your score is below 650 or 700, you should work on your CIBIL score and apply for a personal loan online. You can improve your CIBIL score by repaying your EMIs or loan timely. Also, it would be best to avoid taking too much debt simultaneously and regularly check your CIBIL score.
Maintain Low Credit Utilization Ratio
If you have a high debt to income ratio or DTI, you must focus on maintaining a low percentage. Always try to make additional payments towards your monthly borrowed credit and postpone other loans. You can also look for an extra income source to lower the DTI ratio.
Apply with A Co-Applicant
A co-applicant is the person who will be liable for the loan repayment, along with you. If the co-applicant has a good CIBIL history, your loan eligibility will improve.
Compare Various Lenders
Every lender has its lending criteria and rate of interest charged. Therefore, only apply for a loan when you have made detailed research and comparison. Also, organize your documents correctly with accurate and comprehensive information, as the lender desires.
Don’t get discouraged if your loan application gets rejected. Instead, follow the above-discussed points to ensure that your next application does not get disapproved. Following the given tips and working on improving your credit scores, avoiding unneeded debts, and responsibly paying current EMIs or loans can help you get loan approvals fast. PayMe is the best personal loan app that provides loans online. With the minimal documentation process, the loan amount gets disbursed to your bank account within a few minutes. You can get a cash loan from Rs. 500 to Rs. 5 lakh within a few minutes of your loan application approval. Just download the app or visit the website of PayMe India.