Sunday, 24 April 2011

Why Your Loan Application is Rejected

Some important financial decisions are connected with loans. Buying a new house or property, higher education of your children, starting a new business or improving your business etc., need additional money and most of the time you have to approach banks or other financial institutions to get a loan. But sometimes your loan applications may be rejected due to various reasons. Let us see what are those reasons and can try to avoid those reasons when you apply for a loan.

The residential address you provided is in the black list. You might be aware that all credit related information is recorded in Credit Information Bureau and can avail for verification whenever necessary by any financial institutions. Sometimes anybody who was in your address is a defaulter of  any payment of loan or credit card payment or any utility bill payment the residential address may be rejected when make a computer match and your loan application may be rejected.

Defaulter of any loan repayments or credit card payment. If you are continues defaulter of any loan repayment or credit card payment no doubt your loan application may be rejected. When the financial institution you applied for a loan tracks your name with Credit Information Bureau and the chances are high to reject your loan application. So be punctual in payment of your EMIs, credit card bills and utility bills.

Your income should be enough to compensate your expenditure and paying off all your loans. If you have a lot of loan and the financial institution feel that you are not able to pay off your loans or your income is not sufficient to pay off your loans after your expenditures, the chances of rejecting your loan application is very high.

If you are a loan guarantor and the loan is not paying off properly the chances of rejecting your own loan application is more than accepting your loan application. So when you sign as a loan guarantor is sure that the person you are signing for loan is able to pay off the loan timely.

If the Co-applicant of your loan has not paying off any loan or credit card payment. The track record of your co-applicant also may be affected your loan application. So be vigilant when you choose a co-applicant even if it is only for a formality.

The stability of your job. If you are not stable in your job and you have a nature of changing your job regularly, the chances of rejecting your loan application are high. Be stable with your job and increase your creditability. If You have an unstable job record you may not get a good loan deal.

If the co-applicant is your siblings or a friend, some banks may reject your loan application, but if you make your spouse or parents as co applicant, bank may accept your application.

If your loan application rejected any time before this application. You apply for loan only for a specific reason. Avoid taking loan always. Only if you could not avoid a loan go for it. If you apply regularly for loan the chances of rejecting your loan is high and if once your application is rejected the chances of rejection may happened again.

So be cautious when you apply for a loan and pay all your bills in time and get a good credit report before applying a loan.

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