Reasons why your loan request is getting rejected despite having a good credit score
Our credit cards play a critical role in approving our loan requests. Still, there are situations where lenders and financial institutions refuse to approve our request despite the importance of our cards. To know why it happens, follow up with this article.
What is a credit score, and what are its perks?
A credit score is a simple three-digit numeric expression in the range of 300 to 900 that indicates a person’s creditworthiness based on his or her past credit history and credit ratings.
Having a credit score benefits an individual in many ways, like:
- One can get an immediate instant personal loan with a low-interest rate when facing any financial shortcomings.
- One can opt for any credit line from the credit unions of their choice
- Having a good credit score makes a person more favorable for further loan inquiries, and banks or lenders may approach him for the same with attractive rates and offers.
- It allows you to grow your credit by saving less and helps you spend within your limits.
- It keeps track of your credit utilization for better management.
Why do banks reject your home, personal, or car loans applications?
You may wonder why do the banks or the lenders reject your loan application even when you have a good credit score. Banks lend you money if you qualify for their given eligibility criteria. And when you meet the requirements, you become more suitable for them.
So, aside from having a good and decent credit score, certain essential factors need to be considered for it, failing to which may lead to the denial of your loan application.
Let’s investigate the following few reasons which are responsible for your loan request rejection and how you can improve it.
- If you do not have a consistent job, things can be affected if you have not been at a workplace longer. Or do not have a sustained employment status for a longer run. To avoid this, you can start being responsible for your work and gain more work experience as a regular employee at any reputed and established organization.
- If you have Low gross income: Although your payment does not affect your loan approval possibilities in a significant way. But suppose your monthly income is less than the required criteria. In that case, it may make you ineligible for the banks or lending institutions may find you incapable of repaying the loan amount.
- If you have any pending or unsettled debts: Most of the time banks or lenders do not approach you for the loan if you have any other previous open loan inquiries unsettled and incomplete. Hence it is suggested that you close all your previous debts and loan inquiries before you apply for any kind of loan.
- If any errors are appearing in the credit report: Oftentimes while filling out the loan application form, chances are quite high that some errors or mistakes might have crept in. Due to this, the credit report gets disturbed. This also happens because you may have filled in incorrect or incomplete application forms. So, it is very important to be vigilant and careful while filling out the application to avoid any fault in your report later.
- Poor Credit history: How you manage your credit influences the banks and lending institutions in many ways. Not paying off your bills on time can degrade your credit. And your value as a borrower will deteriorate. Hence, it is recommended to complete your financial obligations duly.
If you ever find yourself in a situation where you experience loan rejection despite holding a great credit score, you can get assistance from Buddy Loan. There you can get a loan amount of a minimum of ₹10,000 up to 5 lakhs with flexible repayment tenures and interest rates starting from 11% per annum only.