Have your ever applied for an auto loan, a home loan or a personal loan? What if the loan application got rejected? What to do next? Rejection of any kind is one of the greatest fears that lies within us. But there is also a way to address this. Put on your thinking cap to understand the few ways on what to do next when your loan application gets rejected.
- Know and understand:
Check with the credit institution to know the reason for the rejection-read it and understand the reason!
As per RBI, “A bank cannot reject your loan application without furnishing valid reason(s) for the same.”
Does the reason talk about a low credit score? Does it point to poor payment history? Are the reasons reflecting in your credit history? It’s time to check your credit report to know the reason or if there is any other reason.
- Re-check your credit score:
A low credit score is one of the reasons for which the credit institution may have rejected the loan application. There are different credit scoring models that different credit institutions may follow – it may be its in-house scoring model or a credit score obtained from a credit bureau. It is advisable to check your credit score with one of the credit bureaus in the country to know how credit healthy you are.
- Do an error check:
A credit report contains your demographic details, credit account details and payment history. Do a check if there are error on your credit report related to your personal details or account details. If there is some information which you think is not related to you then it needs to be rectified and updated by the respective credit institution and thus at the credit bureaus.
- Seek help:
Do you need help to understand your credit report? Do you find it difficult to read your credit report? Credit counsellors guide you in understanding and reviewing your credit report .They also suggest ways to improve your credit score. Seek the guidance of these experts.
Rejections are always a learning experience. Stop worrying instead, be little more alert, be a little more prudent, be a little more assertive and a little more proactive-be disciplined and a window will open again!