28-year-old Rajesh Chaturvedi was saving to buy his first property in Borivali, in the western suburbs of Mumbai for the past 5 years or so. He had invested in equity mutual funds and was ready to make a down payment. With a stable job in an MNC, he strongly believed that nothing could go wrong as far as his loan application was concerned.
But life had other plans for Rajesh. In his excitement to invest in his dream home, Rajesh had completely overlooked the fact that his credit report must be perfect as well. As a result, he went into shock, when his loan application was denied. He was a regular and conscientious credit user and always repaid debt on time! How could he land up on the loan defaulters list?
Upon scrutiny, he found that it was a case of mistaken identity and the loan accounts assigned under his name did not belong to him at all, but another Rajesh Chaturvedi who had defaulted on a loan and thus his name showed up on the loan defaulters list. Upon scrutiny of his CIBIL report, all Rajesh had to do was raise a CIBIL dispute. His problem was sorted within 15 days and he was ready to apply for a Axis bank home loan yet again within a month.
If your loan application is denied do not despair. It is not such a terrible thing as you have a chance to rectify what is ailing your financial health. Here is what you do under such a situation:
First up find out what is it that went wrong. You must have received a rejection letter from the lender stating the reason. For instance, Rajesh got to know that his loan application was denied on account of a poor CIBIL score. This knowledge led him to the discovery of the fact that his name was on the loan defaulters list.
If your loan application like Rajesh has been denied because of a low CIBIL score, you will need to pull out your CIBIL report immediately to scrutinise wherein lies the problem. An error on the CIBIL report is quite a common phenomenon, so do not fret even if you find that your name is in the loan defaulters list. You need to follow the instructions on the CIBIL website to raise an online dispute. Alternatively, you can also write to CIBIL with your grievance and include documents of evidence of the issue at hand. Depending upon the nature of your error it can take upto 30 days for the rectification of the error.
If your CIBIL report is error free, your loan has probably been denied because your credit behaviour needs improvement. Often, it is credit card debt that tends to pull down the CIBIL score of an individual. If that is the case, you must try to clear off credit card debt as soon as possible. You may have to put your home loan application on hold for a while till such time your credit card debt has been fully paid. Consider liquidating other assets to pay off this debt at the earliest. You may even consider taking a personal loan or a gold loan for a short tenure to pay off your credit card debt. In fact, regular repayment of a personal loan can also help you rebuild your CIBIL score in due course.
Whether it is an Axis bank home loan, or any other home loan, do not be in a hurry to re-apply. Every time you make a fresh application for a new credit line, it results in a hard inquiry. Each hard inquiry pulls your CIBIL score down by a little bit. Each hard inquiry features on your CIBIL report and remains on it for two years.
This means that if you have applied for multiple loans your credit score may come down even further thus hampering your chances of getting a home loan. Besides, if your loan application has been rejected in the recent past, it may make the lender even more sceptical. In a worst-case scenario, your loan application may be denied yet again.
Therefore, it is prudent to wait until you are sure that your CIBIL score is satisfactory and your CIBIL report is impeccable. If the drop in your CIBIL score is a result of your own credit behaviour in the past, do what it takes to get your credit health back on track. Regular and timely repayment over due course will improve your CIBIL score. Bear in mind that patience is the key when you are trying to improve your CIBIL score.
Metaphorically speaking, getting back in shape, financial health wise, is no different than your physical health. Just like regular exercise and the right kind of diet in a disciplined manner shapes your physical health, disciplined credit behaviour gets your financial health back to shape. Once your credit score is rectified you can make a re-application for an Axis Bank home loan.