4 Causes For The Personal Loan Rejection.

A personal loan also known an as consumer loan is sanctioned and used for purposes of medical, family or household purposes. This loan can be either secured or unsecured. This financial aid is sanctioned on the certain factors that are taken into account. However, during the sanctioning, there is a possibility of the loan application getting rejected. In this article, we give you X reason why.

1. Bad Credit Score

Before you begin your application, the bank or financial institute will check your credit history for any disparages or problems. Even if there is a remark in your CIBIL report, it can lead to a cause for rejection. Thus check your scores before you begin your process for the request of the loan. If you are applying with a co – applicant, the risks are higher, as both the applicants credit history is taken into account. Thus this is one way to avoid getting a rejection on your request for a personal loan

2. High DTI Ratio

Certain banks follow a system that measures your debt to income ratio called the DTI ratio. This ratio measures how much of your income you are using for you EMI payments if you have any currently. If the number is high, than it indicated you are already over leveraged and will not be able to manage the extra EMI payments. The ideal way to avoid this problem to ensure that your ration is below 50% to ensure that you have a higher chance of getting your submission sanctioned.

3. Stood Guarantee For Defaulted Loan

If you have stood as a guarantee for someone else’s financial aid application as a guarantee, you must careful as it may affect your financial history. When you sign as a guarantee for the applicant, you must make sure that the individual has the ability to repay the loan without any problem. If the applicant fails to repay the loan, you will have to step in and repay the sum. If in the situation you are unable to repay the sum, it will affect your CIBIL scores, thus reducing your chance for acceptance for a request for loan.

4. Address Is On A Default List

Normally, for an application for any financial aid, the bank will ask for the applicant’s address. In the course of time, if there are any problems with the financial request, the address registered will be blacklisted. If you have just recently moved into a home with an address that has been blacklisted by the bank, there is a high chance that your personal loan application will be rejected. Ensure that the bank has the corrected address registered under your name before you proceed further with the application.