You will be surprised there are several factors that are considered by the bank for loan disbursement even though you are drawing a reasonable monthly salary.
Nowadays rejection from banks when it comes to loan applications has become quite common. In this recession recovering economy, about 80 percent populations are in some kind of debt, be it credit cards, bank loans, etc.
So, banks feel unsafe in offering bank loans like it used to do earlier. Below mentioned are the few reasons why banks reject loans for a candidate. These include:
Based on your credit score
A credit score is the most important factor for the disbursement of a loan. This credit score is genereated by CIBIL, in collaboration of the trades union. Generally, a credit score has between 300-900 points and is based on a number of factors such as past credit history, monthly salary statement, etc. One is considered a risky borrower if he or she has a score closer to 300, while a borrower having a credit score of 900 will be considered a safe investment by the bank.
Previous loan defaulter
If you have any previous loan from the bank, and have defaulted, you will be considered a risky borrower. About 90 percent of the time, banks will decline any other loan request from an individual with a previous default record.
Borrowed against your credit card
The banks will decline any loan request in case you have borrowed money against your credit card, and have been unable to pay it back. Also, they look into whether you have overutilized your credit limit in any month, and your payment cycle as well. If you are paying back just 10 percent of total amount due or the minimum due amount, you will be considered as a potential risk borrower.
Previous inquiries of loan
Banks also look into the fact that how many times a customer has inquired about the loan before. So, if you are currently not in the need of any bank loan, it safe not to enquire about it from any financial institution as it may affect your credit score.
Hence, the above-metioned points will be considered by the banks while disbursing you any loan. So, borrow wisely!
