Refusal to give Home Loan
Customers are like God for the bank, but many times banks refuse to give loans to this God as well. If your loan application has also been canceled by the bank, then know what you should do.
Why was the application rejected?
If the bank refuses to give you a Home Loan, Mortgage Loans, then find out what was the reason behind it. Knowing the reason why your loan application was rejected is very important. Sometimes banks refuse to give loans due to small reasons.
Minor cause or serious cause
Even if your address verification remains incomplete, the loan application may get rejected. Sometimes there can be serious reasons behind canceling the loan. For example, even due to bad credit rating, banks cancel your loan application.
Your income is low!
When the bank feels that your income is not enough, then banks postpone the loan. Banks want to ascertain whether you are in a position to repay the loan. That’s why banks want to collect in-depth information about your income and bank account. Banks may refuse to give you a loan unless your income matches the bank’s set standard.
A credit score & cibil report is bad
In most cases, the biggest reason for refusing a loan is a bad credit rating. For example, the CIBIL score ranges between 300-900 and 750 is considered good. According to CIBIL, 79 percent of bank loans have been given to those whose score is above 750. Similarly, for companies, the ranking of the Companies Credit Report (CCR) is decided according to the scale between 1 to 10. A company with number 1 is considered the best score.
Improve credit score
If your bank refuses the loan because of the credit rating, then definitely take a detailed report from the credit rating agency. When you get your detailed credit report, read its full details.
There is a big possibility that your credit rating may have gone wrong. For example, the loan which you have already repaid, many times it is showing pending in CIBIL report. So if you find such a deficiency then cross-check and ask the credit rating agency to fix it.
Choose another bank
If one bank refuses to give a loan, then talk to another bank. It is always beneficial to apply for a loan at your bank branch.
If your bank refuses to give the loan, then choose another bank route. In many cases, rural banks and regional co-operative banks impose less stringent conditions. The chances of getting loan quickly in these banks increase.
Increase down payment
You can increase the down payment amount of the loan if you apply for a loan for any type of purchase like home and car loan.
This increases your chances of getting a loan easily. The big advantage of this is that the EMI of your loan decreases as well as the debt burden is reduced.
Pay off old debts
Many times you are unable to get a new loan due to the high amount of the old loan.
Generally, banks want debt to income ratio of around 35 percent, and DTI above 40 percent falls in the risk category. When the DTI is calculated, it includes your old personal loan, car loan, home loan, and credit card dues.
If the loan is rejected because of the debt-income ratio, then first clear your old loan.
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