Small personal loans are an excellent source of relief in times of financial distress. Applying for small personal loans is easy, fast, and generally characterized by a high success rate. However, there are some instances where small personal loan applications get rejected. If you’re looking to apply for a small personal loan, it helps to work with an online lender with a streamlined process that requires minimal documentation so as to increase the chances of success. KreditBee is a premium online provider of affordable instant loans to meet your requirements. Here are some of the common reasons for loan rejection:
1. Multiple Hard Enquiries
Every time a prospective borrower applies for a loan, the lender enquires about their credit score. Multiple such enquiries in a short period indicate that the individual is under financial stress. This has the effect of discouraging lending institutions from extending a small loan to the borrower. If you’re looking to get a small loan, it is wise to apply to only one lender so as to increase the chances of approval and loan disbursal without denting your credit score.
2. Low Credit Score
This is a no brainer. A low credit score significantly reduces a borrower’s chances of availing an affordable loan. A low credit score indicates poor repayment history or defaults. It discourages lending institutions from doling out loans and often leads to rejection. Maintaining a healthy credit score is essential to avail small personal loans and other types of loans.
3. Incomplete Documents
It is critical to submit all necessary documents when applying for a loan. Missing out documents like salary slips or ID proof can lead to application rejection. Offline loans from banks usually require more documentation and other proof. This scenario increases chances of missing out on some important papers, leading to loan rejection. Reaching out to a reputable online lender allows you to enjoy a speedy loan application disbursal process with minimal documentation. Its also quite easy to submit any missing documents without impacting the timeline for processing the application.
4. Low Salary
A low salary is usually indicative of low repayment capacity. If a prospective borrower’s loan requirement overshoots their estimated repayment power, lending institutions may hesitate to approve such a loan. It is advisable to apply for loans that are less than your total income, which allows you to repay according to schedule.
5. High Credit Utilization Currently
Maintaining a healthy utilization of credit is critical to availing loans in times of distress. It is wise to stay below 30 percent of your total credit capacity. Applicants with an existing stack of loans are less likely to get loan approval, especially if the total loan value crosses 30 percent of their borrowing capacity.
Small amount loans are available for several reasons, which means they are always in high demand. Avoiding the mistakes discussed in this blog goes a long way in protecting your application from rejection. KreditBee is your one-stop destination for instant personal loans. To discuss your small loan requirements, call 080-44292200 or email [email protected]