Have you 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 lie within us. But there is also a way to address this. Put on your thinking cap to understand what you should do next when your loan application gets rejected.
Know and understand: Check with the credit institution to know the reason for the rejection. Try and understand the reason. According to the Reserve Bank of India, “A bank cannot reject your loan application without furnishing valid reason(s) for the same.”
Has the rejection happened due to a low credit score? Does it point to poor payment history? Are those reasons reflecting in your credit history? It’s time to check your credit report to know the specific reason or if there is any other reason behind it.
Recheck your credit score: A low credit score could be one of the reasons why the credit institution rejected the loan application. There are several credit scoring models that different credit institutions follow – it could 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 whether there are errors on your credit report related to your personal details or account details. If you find some information that is not related to you, it needs to be rectified and updated by the respective credit institution and then at the credit bureau.
Seek help: Do you need help to understand your credit report? Do you find it difficult to read your credit report? Credit counsellors can guide you in understanding and reviewing your credit report. They can also suggest ways to improve your credit score. Seek the guidance of these experts.
Rejections are always a learning experience. So stop worrying and be a little more alert, a little more prudent, a little more assertive and a little more proactive. Just be disciplined and a window will open again.
Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy
Courtesy: Business Insider