Getting loan approval during times of pandemic has become a herculean task. Most lenders have implemented stricter criteria for sanctioning loan applications. Though there are changes in the criteria for loan approval, our needs have not changed. You may be in dire need of a personal loan for any emergencies, a business loan for developing your business enterprise or a home loan for your dream home. A loan application rejection can crumble all your dreams. If you keep a few points in mind before submitting your loan application, you can significantly reduce the chances of rejection. These are applicable if you have applied for a loan offline by making a physical visit to the lender or applied online through a loan app for finance. Check out some of the key points on how to ensure that your loan application is approved quickly.
1. Check For The Eligibility Criteria
Before applying for any loan, you should assess the loan eligibility criteria fixed by the lender. Sometimes, the lender might have criteria that you may not fit into and you may apply without giving it much importance. In such cases, the chances of rejection are high. If your loan application gets rejected, that will harm your credit standing as each application is treated as a loan inquiry and recorded in your credit report. This could lower your credit score and will negatively affect your future loan approvals.
2. Check Your Credit Score
Credit score is a three-digit value, and it ranges from 300 to 900. A credit score of 700 and above is considered good by most of the lenders. Applicants with a credit score of 700 and above have a good chance for loan approval. Even if you have a good credit history, it is always better to check your credit score before applying for a loan.
You may have to pay multiple credit card bills a month and may have missed out on a couple of credit card payments on due dates and paid it a day or two later. Any such delay in payments can affect your credit score. Check your credit report every year to rectify any errors or misses. If your loan application gets rejected, it can have a negative impact on your credit score. So, always check your credit score and see if it aligns with the lender’s credit score eligibility.
3. Apply Only With One Lender At A Time
Every lender can come to know about the loan applications you have made. Multiple applications imply you are in desperate need of money and maybe in a financial crunch. In such scenarios, the lenders may avoid providing you with a credit facility. This could lead to multiple rejections, which could directly affect your credit score.
To apply with multiple lenders, you must also invest a great amount of time keeping track of all the applications and coordinating with them. So, multiple rejection not only causes disappointment but also results in loss of valuable time.
4. Avoid Reapplying Before Six Months
If your loan application is rejected, do not apply for another loan immediately. Wait for at least six months, assess why your loan got rejected in the meantime and work on the shortcomings. Try to improve your credit score and history. If you research the lenders’ eligibility criteria to improve your creditworthiness, it will make you eligible for the funds you need. Every time you apply for a loan, the lender initiates a ‘hard’ check into your credit history. Each hard check marginally lowers your credit score. If you apply for a loan shortly after the rejection without working on the shortcomings, it will lead to a further drop in your credit score, which can take a toll on your future approvals.
5. Repay Your Previous Debts
Before applying for a new loan, ensure that you have repaid all the debts, including the ones in the form of pending secured or unsecured loan repayments and outstanding bills. Clearing your debts will increase the chances of getting the loan approved. Always repay your debts on time as per the terms and conditions of the lenders.
6. Provide Accurate Information
Never try to hide your income and expenses while applying for a loan. Using your credit profile, the lender can examine your bank transaction, previously availed loans, IT returns, etc. Also, the lenders can identify any manipulations made on every document you upload by checking specific signs and symbols for originality. Submission of incorrect information and uploading duplicate papers is a criminal offense. This could lead not only to the rejection of your application but also to legal actions from lenders.
7. Keep The EMI Lower Than 30% Of Income
Lenders consider your repayment capacity when you apply for a loan. Always ensure that the EMIs of your pending and new loans do not exceed 30% of your income. For example, if you have a salary of Rs. 70000, then opt for the EMIs that do not add to more than Rs. 21,000. This will increase your chances of getting the loan approved.
Consider every aspect before applying or availing a loan. Conduct proper research about different money lenders in the market, their eligibility criteria, interest rates, loan application procedures, and terms and conditions of repayment. Follow the above mentioned key points before applying for a loan offline or online through a Finserv MARKETS app. And finally, send out a loan application to the lender that suits you best.