Loans can be altruistic in innumerable monetary situations. Possibly personal loans, business loans or home loans. We have two categories of people applying for loans, one’s who are the authentic loan seekers and some who have ifs and buts on their minds.
A genuine candidate will work hard to add whole set of documents. But above all such situations arise when your loan application get rejected. What is the loan eligibility criteria or what are the reasons of rejection of loan applications?
What are the top 7 reasons of refusal of debt applications? Find out below:
1.LESS CREDIT SCORE
Low credit score can be the reason for denial of debt application. More the credit score more the chances of instant loan approvals. Your scores are based on your transaction history. CIBIL (CREDIT INFORMATION BUREAU OF INDIA LIMITED) this organization keeps record of all your credit activities and maintains the credit history of more than half million people and organizations. The credit score is generated on basis of this credit history. Which is also known as CIBIL score.
HOW THE CREDIT SCORE IS DEFINED?
CIBIL holds the record of the EMIs paid or unpaid on time of credit cards or loans taken. Payments done before or on due dates helps improve credit score. It can be termed as a financial exam where you get credit scores range 0 to 900.
HOW TO CHECK YOUR CIBIL CREDIT SCORE?
Two methods are available for getting your credit score. First is chargeable and second one is free of cost obviously it’s better to go for the free credit score report but I will inform you about both.
For first method you have to login to CIBIL.com and pay the fixed amount and you can download your credit report from there.
And the free credit score method is you can login to such websites like Paisabazaar.com, Bankbazaar.com etc. You will get free online credit report from there.
Loans: HOW’S THIS RANGE OF CREDIT SCORE 0 TO 900 DEFINED?
- Credit score -1 :
Credit score -1 shows you don’t have any credit history. Still if you have no need for taking loans. Apply for some loans or credit cards and clear the payments on time to present a good credit history. This will help you at time of credit score analysis.
- Credit score 0(zero) :
Credit score of zero means minimum credit activity. If the credit history of the creditor is less than 6 months. In this case you can face difficulties while getting loans. Here you can take small amount of debts and payback to sustain a good credit score.
- From 350-550 :
If your credit score lies from 350 to 550 then you can be considered as defaulted in terms
of bank who have bad history of loan payments. Someone who is not able to pay or late payments of debt dues. In this condition bank avoids providing loans to these borrowers or if they agree they will give it on higher interest rates.
- From 550-650 :
If your score lies from 550 to 650. You are an eligible debtor who’s all the debts done on time. And you will be tenable while applying for new loan applications. Here you got increased percentage of instant loan approvals.
- From 650-750 :
A person having a credit score of is a financially prudent person’s score. At this score you become an ideal customer for banks and other money lenders. If you keep going with this financial prudent you may lead your credit score on top.
- From 750-900 :
The credit score from 750 to 900 is the highest credit score. People scoring this come under the list of financial experts. They are banks favorites, banks will always contact them to buy new credit cards and loans.
DOES A HIGH CREDIT SCORE GUARANTEES LOANS?
It is mandatory to have a good credit score but it does not guarantee of loans. And CIBIL does not play any roles in bank loan process it totally depends on the banks and companies whomsoever you are seeking for debt.
- DEFICIENT EARNINGS
If your cash flow analysis is very low or in case of low income your application can be considered for rejection of loan application. The criteria of monthly earnings does not match with your income than your application can be refused by the bank.
- UNCERTAINITY OF JOBBUISNESS
Previous record of continuously switching the jobs in the time period of 2 years proves uncertainty of job. Small business owners or first time entrepreneurs lack credibility while applying for loans. Long-term strategies such as if you wish to apply for loan by 2023.Then sticking to same job for 5 years’ time period is necessary.
- PREVIOUS UNSETTLED DEBTS
Settle all the previous debts before applying for a new one will present you as a better borrower. Too much debts show inability to handle the down payments. The debt to income ratio will show you’re not eligible to afford a new debt, resulting in rejection of loan applications.
- INACCURATE DETAILS IN APPLICATIONS
Improper basic details such as name, residential address, phone number or other account details or inappropriate documents attached with the loan application let you fail in loan approval. Deficiency of right information may get you to loan rejection. Rechecking all information provided may help increase chances of consideration.
- ABSNSE OF COLLATERAL
Money lenders will always consider a tangible collateral provided against loan to approve the loan application. Securing your loan by offering something as collateral might help you get approved.
7 . NOT ELIGIBLE
Other factors like age, nationality & educational qualifications sometimes cause rejection of loan applications. People with age limit of 60 will face difficulties to get loan approvals. It is better to use co-applicant facility in such situation.
To avoid such dismay it is advised to do long-term financial planning’s for you and your families. Strategically done financial analysis helps get big hand on economy when needed..