Tuesday, 12 January 2016

Denied a loan? What happens now?

“Most of the important things in the world have been accomplished by people
who have kept on trying when there seemed to be no hope at all.”
– Dale Carnegie
How apt is this quote for those who have recently faced a rejected loan application. Just imagine that you are in the process of buying your dream house and you apply for home loan. But unfortunately the loan gets denied. Now what?
This situation can be really disheartening, for both financial and personal reasons. You have paid for booking the property and now living into your dream house seems to be a far-fetched dream. It not only leads to shattered hopes and plans but it also leaves prospective customers feeling helpless and clueless on where to go? What to do? Well, for starters the good news is not all is lost. Credit solution is available for you. You can do the following to make headway once again.

  1. A lot of people are travelling in the same boat. The first question that you must ask your creditor is “Why”. It is important to find out why was the loan rejected? It is possible that you lack some essential documents or are not eligible for the sanction amount that you have asked for. There could be many more reasons that may be difficult to understand. But there is nothing to worry. Once you have found the reason for rejection, you can work around to resolve the hindrance.

  1. One of the most common reasons for rejection is your credit report. In such a case, you may be directed to contact CIBIL to find out your report. It is advisable that you check your credit report at least six months before you apply for a loan. But if you hadn’t done so, not to worry. Do it now. Ask for a copy of your report from CIBIL. Find out your score and other information provided about you. You can certainly spot the reasons that are pulling down your score and work upon to improve CIBIL score. If there is misinformation that is affecting your score then raise a dispute with CIBIL to get it rectified.

  1. Raising a dispute with CIBIL and working on improving your score may help. But if it seems that everything else in your report seems good, then do not hesitate to ask more questions to your creditor. Sometimes you may not be meeting their minimum eligibility criteria for picking up the loan amount you may have asked for.

  1. Banks are interested in giving loans to customers and a rejection affects them as much as it affects you. Loans are part of their asset stream. Their business grows with more loans sanctioned. All banks and financial institutions have different internal policies and parameters while considering a loan application. Sometimes the reason for a rejection may be as small as a missing document or the mortgage offered is not in accordance with the policy of the bank or financial institution. By arranging the required document or accepting the lower loan amount for now you can move ahead. Arranging a guarantor for your loan may also help. You may ask the lender to re-evaluate your mortgage or you could offer some documents in support of it.

  1. Banks have a standard procedure of verifying all details that you may have mentioned in your application.  A failed verification attempt, like wrong address, wrong employment details etc can also lead to a rejection. You must be careful of what you mention in your application. Correcting such errors and reapplying may help you to get your loan approved.

  1. You can rephrase your loan application after you have examined it from a bank’s point of view. Check your credit report before applying, be certain that your details are spot on, all your documents are ready and your income limit is in accordance with the amount of loan you are seeking.

  1. Furthermore, you can get a second opinion. You can apply to non banking financial institutions if no bank has picked your loan yet. It is possible that you may have to pick your loan on a higher rate of interest. But you could negotiate although since there is not much competition from banks, it may be difficult to negotiate on the rate of interest.
You must explore the loan market and apply to other banks or other non banking financial institutions and keep looking for a loan that would suit your need. But you must not do it without preparation. Please do bear in mind that too many rejections will adversely affect your credit score.
Do your due diligence before applying for a loan, make sure the details entered are correct and verifiable, always observe financial discipline and be credit responsible is our best suggestion to you.
Happy credit to you ☺

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