When waiting on a loan application to be removed, some of us may worry about our application being rejected or denied.
This holds especially true when waiting to hear back from the bank and the worry can make a few days seem like a few weeks. But having a loan rejected isn’t the end of the world. Here’s what you can do if your loan application has been rejected.
Figure out the reason
You need to understand that the bank has rejected your application for a reason that you don’t meet their expectation in some way. So the first thing you must do is to figure out why your application was rejected. Is it because of a low credit score, no credit history, non-maintenance of your savings account, already repaying other loans, incorrect documentation or something else?
Dealing with the reason
Now that you have found out what went wrong with the rejected application, you can take several steps to ensure that it doesn’t pose a hurdle on your next application.
- Before reapplying for the loan, verify that you don’t have any credit card debts to be paid.
- Also, see that your savings account fulfils the minimum balance required.
- Find out if you have a good credit score. If you don’t have one, then you have to make efforts to improve your credit score.
Try and pay the credit card bills on time, repay your existing loan instalments by the due date, make transactions on your savings or current account, maintain the minimum balance as specified by the bank, etc. This will help show up in the credit score when you re-apply for the loan after a period of time. A Credit History records your financial behaviour for a period of 12 months.
Use a loan calculator available on the Internet to find out if your annual income and annual expenses are good enough to fetch you a loan. If you are eligible for a small loan amount based on your income, you cannot apply for a larger loan amount.
Having a loan application rejected can be disappointing and may hamper immediate plans but doesn’t mean that there isn’t hope for you yet. Knowing the reason as to why your loan was rejected is half the battle in itself. Work on your hurdles and be patient. Rectify the mistakes before you deice to re-apply or approach another bank for a loan.