Steps to take if your loan application is rejected

financialexpress.com:

Loan application rejections can stem from various factors. Commonly, inconsistencies or delays in debt payments stand out as primary reasons. Additionally, lack of awareness about how a negative credit history impacts loan approvals can lead to rejections. If you’ve recently faced rejection, it’s crucial to understand the causes and take corrective action.

Monitoring the impact of these rejections on your credit score is vital as multiple rejections can worsen your score, requiring months or even years for recovery. Here are steps to take if your loan application has been declined:

Discover why your application was rejected. Lenders often provide reasons, enabling you to rectify the issue to enhance eligibility. For instance, securing a guarantor might bolster your chances. Rejections can result from various factors like a low credit score (below 700), insufficient income, existing loans, late or non-payments on prior loans, problematic job history, or legal complications related to pledged assets. Errors in your credit report, such as your PAN being mistakenly linked to someone else’s loan default, can also trigger rejection. Understanding the specific reason is crucial for improving your credit standing.

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Ensuring punctual payment of EMIs and debts is crucial for maintaining a healthy credit profile, reducing the likelihood of loan rejections. A credit score above 750 opens doors to the best loan offers. If a low credit score caused the rejection, focus on improving it. Prompt and complete repayment of your dues gradually elevates your credit score. Additionally, maintain a low credit utilisation ratio (CUR) and avoid closing existing credit cards or