Consistency And Preparedness = Loan Approval
At some point in your life, you will have to borrow money or take a loan from a financial institution for something. It can be to purchase a house, car, or consolidate some of your accounts together in order to diminish the monthly payments and interest rates, etc.
For this, you can either apply for a secured loan or an unsecured loan. Getting a secured loan is quite easy as compared to an unsecured loan, as in secured loans the loan is secured by something, which is the collateral. In case, you do not make the payments for your secured loan, the lender can take back something from you.
On the other hand, there is no collateral on unsecured loans, which makes it more difficult for the applicant to qualify for them. Only when your loan application gets approved by the lender, then you get the money. In case you do not pay back the loan amount on your unsecured loan, the lender does not have anything to take back from you. In such cases, the lender will have to opt for other money collection ways in order to get paid for the loan.
If your loan application gets rejected, you cannot get the money. There is nothing worse or more heartbreaking than getting your loan application rejected. Thus, we have come out with 5 ways through which you can shape up and boost the chances of your loan approval.
1. Boost your credit portfolio
Before you apply for a loan, makes sure that you have your credit report. You can get it from CIBIL (Credit Information Bureau India Ltd.). This way you can know what the lenders will see, when they evaluate your loan application. Analyze your credit report for any errors or issues.
In case you find any discrepancy in your credit report, immediately notify the agency. No matter how small the error is, you must get it rectified, such an old credit card account that you do not use but it is still open or a wrong house address.
2. Have genuine proof of your savings
It is certain that you would be saving your money in some form or the other. And, even if you have not started saving yet, you must do it immediately. Nowadays, most of the lenders ask for a proof of the applicant’s genuine savings, particularly if you are applying for a home loan and are borrowing 90 per cent or more of the property price. In such a case, it is compulsory to show a minimum of 3 months of your legitimate savings in the form of savings accounts, mutual funds, or term deposits.
3. Pay all your bills on time
When you apply for a loan, lenders will check how often and when you pay your bills late. Therefore, it is always advised to stay up-to-date on all your bills. You can do this by setting up a direct debit for your credit card and utility payments.
4. Reduce your debts as much as you can
In order to prove to the lender that you can responsibly manage your money, you must reduce your debts as much as you can. For instance, if you have a credit card or car loan, then you must make monthly payments above the minimum requirement.
5. Do not go for career changes
When you apply for a loan, lenders will scrutinize your finances, including the time length of your present job. They will check for how long you have been in your current job. Therefore, it is advised that you must continue with your present job and hold off any career changes til your loan approval is complete. The bank may ask for your latest pay slips of nearly three to six months, when you apply for the loan.
Just follow these tips and improve the chances of getting that loan approval, particularly if you have bad credit. This way you can avoid the rejected stamp on your loan application.