As a result, knowing your CIBIL score before applying for a loan is ideal. Before applying for a loan, review your CIBIL credit score on a regular basis to see whether there are any discrepancies in your report.
Rejection of a loan has an effect on your CIBIL score.
As previously mentioned, any bank can review your CIBIL credit report as part of the loan application process. A hard inquiry occurs when a bank or credit institution makes a request. Since a hard inquiry lowers your CIBIL score, you should avoid applying for several loans from different banks at the same time, as each rejection would lower your CIBIL score even further. Even, if your recent loan application was denied, do not apply for another loan right away because it will lower your CIBIL ranking.
Rejection of a Loan for a Variety of Reasons
Aside from a low CIBIL ranking, there are a few other factors that can contribute to loan rejection.
Regular borrower: It's simple: if you borrow money often or have several loan accounts under your name, banks are less willing to extend you new credit because they are concerned that your current debt-to-income ratio would worsen. A risky borrower is someone who borrows money on a regular basis, and banks would identify you as such. Your CIBIL credit score and rating could suffer as a result of your continued reliance on credit. With a low CIBIL score, you're more likely to be turned down for a loan.
CIBIL remarks: In addition to your credit history and CIBIL credit score, CIBIL also has a few financial remarks. These remarks or comments may prevent you from obtaining a loan and you must pay back the bank Personal Loan Interest Rate. All of the terms and conditions are listed as remarks and comments if you have missed a payment, demanded favorable loan terms, or paid EMIs after the due date.
Unstable employment: Any type of job insecurity can have an impact on your CIBIL credit score. The inability of your employer to pay you on time, as well as frequent work changes, may all have a negative effect on your loan application. Banks can be hesitant to approve your loan application if you have changed your permanent address many times. Banks only hire lenders who can demonstrate consistency in both their job and their financial situation. Faulty credentials: As we all know, banks and financial institutions, as well as CIBIL, collect financial and non-financial information such as name, age, address, current jobs, and so on as part of the KYC process. This can also cause problems for ordinary people if their qualifications match those of a former defaulter. For instance, if you recently changed your rental address and the previous occupant was a defaulter, the bank could deny your loan application to avoid a forged loan approval.
Joint loan applications: Banks do not consider joint loan applications from sisters and relatives. In the banking industry, joint loans with your partner, brother, or parents are appropriate.
Irregular tax payments: Banks favour prospective borrowers who have filed their ITRs on time for the previous three years. This results in an extensive background with the government and credit rating agencies. Previous loan rejection: If your previous loan application was denied, CIBIL and the bank will retain these details. When you apply for a new loan, your current lender will pull all of this information from your CIBIL study, which may result in a loan denial.
Conclusion: Until authorising Axis Bank Personal Loan applications, lenders consider your credit utilisation ratio in addition to your credit score. The credit utilisation ratio is the proportion of credit you have taken to the credit you have available. Before applying for a personal loan, you can keep this below 30% as a rule of thumb. If your credit utilisation ratio is consistently high, your personal loan application may be denied.
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