Getting rejected for loans? Here is how you can be a smart borrower

By: |
June 22, 2021 12:13 PM

A loan applicant’s present income status and credit score are the top factors taken into consideration by a lender before sanctioning any loan. However, this does not reveal the entire picture as there are other factors too that come into play.

loan rejection, how to AVOID LOAN REJECTION, personal loan, personal loan interest rates, personal loan eligibility, personal loan HDFC, personal loan SBI, personal loan emi calculator, PNBVerify beforehand whether you meet all the necessary criteria for loan approval such as positive credit history, a stable income, etc.

Are you tired of facing refusal every time you apply for a loan? Experts say, there must be something that you are doing wrong. Note that being a smart borrower is not that difficult at all.

Rohit Garg, Co-Founder and CEO of, Smartcoin says, “One just has to play their cards right. First thing foremost, one needs to underline the primary causes behind their failure to receive loans from financial bodies.”

Reasons why your loan application is getting rejected

There are various reasons why your loan could be rejected.

  • An insufficiently low CIBIL score or credit score could lead to rejection of a loan
  • You may have unwittingly provided erroneous or invalid information to the lending party, for which during the process the loan application was rejected.
  • There may be certain mistakes or ambiguities in your loan application form
  • You are aiming to apply for a high loan amount that surpasses your current eligibility
  • Failure to produce or submit the necessary documents required for loan approval, and so on.

Here is how you can ensure loan approval every time you apply

Garg, says “Generally speaking, a loan applicant’s present income status and credit score are the top factors taken into consideration by a lender before sanctioning any loan. However, this does not reveal the entire picture as there are other factors too that come into play.”

It is also possible that a lender may refuse to provide a loan to a seeker based on other aspects, which experts believe could be poor employment history, lack of a stable income, and problems with maintaining adequate cash flow or liquidity.

Here’s how you can get loan approval;

Verify beforehand whether you meet all the necessary criteria for loan approval such as positive credit history, a stable income, etc.

One of the important points in loan approvals is the CIBIL score. Garg adds, “One must preserve his CIBIL score well above 750 to ensure loan sanctioning from lenders. A poor credit score is bound to reflect poorly and can deter the lender from green flagging the loan application.”

Experts say borrowers should make an effort to rectify the shortcomings and errors present in their credit report. This means paying off outstanding dues on time and avoiding point drops that occur due to late payments or defaults.

Do not file multiple loan applications as that doesn’t really help in any way. It not only looks spurious but is also considered financial malpractice. Applying to multiple lenders for a loan will also reduce your credit score.

Having said that, Garg adds, “with the evolving times, much has changed. It is now possible to avail credit even with a low credit score. Many new-age lenders and fintech bodies are creating waves in the financial seas by providing credit facilities to borrowers with bad credit based on less rigorous credit parameters.”

The pitfall of these loan options being that the interest rate levied is comparatively higher as supposed to availing credit with a fair, good, or excellent CIBIL score.

Additionally, there are other ways too for borrowing credit with a poor score: leveraging someone with a good credit score to apply with you as a veritable cosigner.

Garg says, “Having a cosigner enhances your shot at getting your loan approved by lenders. Having a trusty cosigner has other perks as well. Enlisting a cosigner with a great credit history can help you score a lower interest rate even if you are qualified to attain approval on your own.”

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