How to Stop Your Personal Loans Application From Being Rejected?
Sooner or later, you will probably find yourself needing a loan to get you to where you want to be. Whether it’s putting down a mortgage or buying your next car, loans can give you the boost you need quickly. Lets understand How to Stop Your Personal Loan Application From Being Rejected?
Even though loans can be a huge help, thousands of applications are rejected regularly. This can boil down to several reasons. However, one of the most common issues is lousy credit scoring. If you want to avoid this from happening, we advise you to continue reading this article to learn some helpful tips.
Firstly, it’s good to know that there is help out there. You can still find personal loans for people with bad credit so if you are worried about all the rejections, there is still hope. However, you will still want some actionable tips on how to prevent this from happening in the first place.
AVOIDING LOAN APPLICATION REJECTION
When you begin your application process, you’re going to want to ensure you tick the following boxes. Doing so will give you the best chance possible at everything going through smoothly.
Even though there’s no fail-proof way to guarantee it will be accepted, this can really give you a step up.
Iron Out Your Credit History:
Bad credit can cause a big bump in the road to your application going through successfully. Even though there are different degrees of bad credit, it’s normally all accumulated into one. Checking your credit score online for free can be super helpful. This way you can see where you’re at before you apply and if things are bad, look into companies that help improve bad credit scores.
Low Income:
Your current income will also put off potential lenders when you are applying for a loan. If you cannot pay when your due date comes, this puts off loan companies. Ensuring you have a high enough wage and can comfortably pay off loans will give you a better chance of things going smoothly. It’s also worth checking what the lowest income bracket is that your loan provider will allow before putting in an application.
Better Handling of Your Credit Cards
Poor handling of credit cards is a common problem in the US. Around 36% of people have more outstanding credit card debt than stock savings. Moreover, 22% of people have no individual savings at all.
They rely solely on credit cards for sustenance. So, let’s see what we can do to control our credit card use.
Have more credit cards than you can handle?
Low credit utilization is the key.
Do you have an abundant credit limit?
Don’t be reluctant to check how much you spend. Reckless spending from credit cards can harm your FICO Score. Around 13% of Americans have at least five credit cards. However, most Americans can’t handle their cards judiciously. So, I feel it is better to have one or two credit cards at the most.
Don’t Use up the Full Limit!
It is advisable not to use 100% of your credit limit. It sends a wrong message to the credit bureaus. Consequently, chances of getting a loan also reduce.
Ideally, spend 30% of your credit limit only.
On one hand, sparing use of your credit card could be better. It weakens your credit use history. On the other hand, exaggerated use is also damaging.
Banks feel you need a more robust financial portfolio if you spend 100% of your credit limit each time. It sends a message that you survive on credit only. Consequently, you may not get a loan anytime in the future.
Timely Payment of Credit Card Bills
Your credit behavior is perceived through various parameters. Firstly, credit bureaus notice your credit card repayment history.
In the US, 11.2% of the population pays credit card bills past 30 days from their due dates. Last year, it was 10.5%. Hence, it seems that more Americans are showing reluctant credit behavior daily.
Don’t Close Cards that You Don’t Use
There are many credit cards that you don’t use now. But it’s better not to close those cards. Having multiple credit cards boosts the creditworthiness of the user.
More importantly, it sends a message to the bank that the person is a responsible credit card user.
Inconsistent Information:
If your lender looks at your application and discovers inaccuracies or things that don’t match up, this will also lead to rejection. Moreover, it is crucial to double check all the information you put in is correct and syncs up with your personal records.
For example, you haven’t paid your last five credit card EMIs on time. That has undoubtedly impacted your FICO Score. It will be rejected if you don’t know the basics and promptly apply for a loan.
No Consistency with Work:
If your CV jumps around a bit, this may make things trickier. If you can, increase your chances of approval by remaining in a job for longer periods. This can make you look more reliable to potential providers and move the process along smoothly.
But here’s a catch. If you recklessly use credit cards when you don’t have a stable income, it sends the wrong message. The bank fathoms that you are living on credit only.
All of these actions can greatly increase your chances of getting approved for a personal loan. Whilst there are no guarantees, doing the above can get you heading in the right direction. Month by month you will be getting closer to a successful loan application.
The Bottom Line
There are several reasons for the rejection of your loan. You may have less credential knowledge about how finances work. However, 191 million US citizens handle credit cards. So, it’s meaningless to fathom that they don’t know the basic parameters like credit scores.
So, it’s only fair to say that Americans suffer from poor credit behavior. Reckless credit card use and recurring credit/loan inquiries sabotage our credit scores.
If we refrain from such habits, the chances of your loan rejection will be low.
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