If you’re worried about whether your personal loan application could get rejected, you will find this guide useful. Some of the mentioned issues include having a low credit score, insufficient income, and a high debt to income ratio. Keep reading to learn more.
Table of Contents
1. You didn’t meet the basic requirements
Most banks need you to meet a few basic criteria. Some of them include being of a minimum age, being a citizen of the country, and being employed with a valid bank account. If you don’t meet some of these requirements, it’s possible that you will be rejected.
2. Low Credit Score
Credit scores are very important when it comes to applying for loans. They tell banks whether the borrowers would be liabilities. Depending on the bank you are trying to borrow from, the specific credit score that you will need would differ. As you can imagine, your location plays a role in the credit score you would need. If you live in Kingston personal loan lenders require a higher score than usual.
We would advise you to try and improve your credit before applying for a loan. You will have to reach out to your local credit bureau and ask for a report back to do this.
Not only would improving your score increase the chances of your loan getting accepted, but you might get lower interest rates too.
3. Debt to Income Ratio
Although you may have a good credit score, your debt to income ratio may not be great. Ask yourself whether most of your income is being eaten by commitments or bills that you have to pay. If the answer is yes, your DBI is low. Banks won’t want to work with you.
4. Insufficient Income
Even if you have a credit score and an acceptable DTI ratio, your monthly income may not be stable or sufficient enough. As you can imagine, banks require that you have a steady cash flow to pay their loan back.
If your income is insufficient, you might not face a declined personal loan. Instead, you may be made to borrow a more suitable amount.
5. Your application was missing information
You need to double check the application that you have sent. Although you may think that you filled all the correct information, it may be filled with errors, misinformation, and don’t include supporting documents that you need.
Be on the safe side and contact the lender and ask everything that is needed. This reduces the chances of you facing any problems.
Considering all of the points that we looked at, what do you think? There are many ways your application can get rejected. Most of the time, this happens when you don’t meet the minimum requirements, or if your credit score is not that good.
When it comes to credit, you can easily fix this by requesting for a credit report and paying back any debts that you owe, though.
Hopefully you found all these points useful.