Small personal loans have gained a lot of popularity in today's time. With these loans, you can easily tick off things from your bucket list and fulfil your varied needs.
Availing of an instant personal loan from the online small loan app has become so easy and accessible. With just a few clicks on your screen, you can instantly apply for a personal loan while staying in the comfort of your home. However, the loan application can get rejected at times because of the negligence of some factors. Before applying for the loan, you need to make sure that you meet the eligibility criteria and that there is no negative loan repayment history, as it can adversely affect your loan application approval.
If you are planning to apply for an instant personal loan, here are some of the factors that you must consider to avoid loan application rejection. Scroll down to know the details.
Credit Score
A credit score is a score that reflects the repayment ability of the applicant. It ranges from 300-900. The better the score, the easier it is for you to avail yourself of a small personal loan instantly. A bad or nil credit score is one of the biggest reasons behind the rejection of loan applications. Banks and various small loan apps do consider your profile with a low credit score as a higher risk as it reflects the tendency of defaults in the past. Therefore, under the condition that the borrower's credit score is less than 750, the chances of loan application rejection become high.
Low-Income
Before approving the loan request, banks and Non-Banking Financial Companies (NBFCs) consider the income of the borrower to get an idea of their repayment capability. In case the EMI on your personal loan is greater than a certain percentage of your monthly income, then the chances of your loan request rejection become higher. Under this condition, you can even apply for a low loan amount and can also add a co-borrower to increase your chances of availing of the loan from a small loan app.
Incorrect Details
Before applying for the loan through the small loan app, you must make sure to provide all the relevant details and documentation to your lender for proper verification. Any incorrect information or document can straightaway lead to the rejection of a loan request as the lender will seek you as a defaulter or a fraud. The rejection of your loan request will thus affect your CIBIL score in the future.
Unlisted Company
If the company that you are working with comes under the de-listed category of the bank, then the rejection of your loan application will be high. Therefore, your company must fulfil the listed criteria of the bank for loan approval.
Stability
Stability plays an important role in the approval of loan applications. Banks and NBFCs often consider your stability on your job and as a residence. For example, if you often change your job, you will not be considered a good and reliable borrower. The same condition applies to the residence. You can apply for an instant personal loan easily via the small loan app.
High Debt-to-Income Ratio
Your debt-to-income ratio (DTI) refers to the percentage of your monthly income that goes toward paying off your debts. If your DTI is too high, it means you are already carrying a lot of debt, and lenders may consider you a risky borrower. As a result, your small loan application may get rejected. Therefore, maintaining a high DTI is extremely important.
Lack of Credit History
If you have never taken out a loan or used a credit card, you may not have a credit history. Lenders rely on credit history to determine your creditworthiness, and without a credit history, they may not have enough information to evaluate your loan application. In such cases, your online loan app may get rejected.
Unstable Employment History
Loan apps prefer borrowers with stable employment histories because it suggests that you have a reliable source of income. If you've had multiple jobs in a short period of time or gaps in your employment history, lenders may view you as a risky borrower.
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Conclusion
During the uncertain financial crunch, it is important to stay aware of the above-mentioned factors to avoid the stressful situation of loan application rejection. Avoid making errors while sharing your personal details or submitting the document. TrueBalance is one of the best instant personal loan apps that offers a hassle-free loan to the borrower in the time of emergency. With this small loan app, you can borrow up to ₹50,000 without risking any of your collateral. Get the loan in just a few minutes with the TrueBalance personal loan app.
