In the loan era, one must know all the aspects of the loan and the related things, eligibility criteria, rejection criteria, what would make it easier to get the loan, what should be taken care of to make sure the loan application is not getting rejected. These are the few things each borrower should know even when they think that they may not need to apply for any credit in their entire life.
In a conventional way of thinking, there still many people think that they do not want to get loans. But when they do not realize that a credit card is also a type of loan. Credits comprise of both, loans and credit cards. So, any individual must take care of their creditworthiness and credit history.
It is important to know that except for the five parameters which make the credit score, what are a few other aspects which can hurt the score. With many types of research and usual conversations about credits and related things, now everyone knows the importance of cibil score the impact of a low cibil score. Getting a loan approved in seconds to getting the loan rejected from multiple financial institutions is usually a topic when anyone is planning to apply from a credit line or has applied for it. From Payment History, Amount Owed, Length Of Credit, Credit mix and New credit the score is established. But there are a few other points as well which affects the loan eligibility. Applying for a loan application in multiple banks in a short span of time also affect a lot in loan approval or rejection.
Disha wanted to renovate her house and so was planning to take an icici personal loans as it would be easier for her to pay the EMIs. Managing such a huge amount for the renovation of the house for her was a little difficult and hence she thought a personal loan would work as the house really needed renovation. She first researched and came to know the basics of how to apply for a loan and things to care for while applying one. But a major part what she missed was, in how many banks she should try to apply for getting her loan approved. In that one thing that she missed created a tough time for her. To make the process faster, she went and applied for a personal loan in multiple loans. When a borrower applies a for a loan in a bank or an NBFC, the professional takes a while to approve the loan. Applying for a loan is considered a hard inquiry and has an impact on the credit report. When there are multiple entries like this in the report in short span of time, indicates that the applicant is in too much need for the loan amount and is considered a credit hungry behavior which is not at all good sign for approval of the loan. And hence, Disha had to face a lot of rejection for her personal loan application.
What happens when one applies for a loan? So, with each application of loan, the banks intimates the bureau. And this information is stored the credit report. A credit report has the detailed description of credit score, all the credits and the repayments done till date along with the list of inquiries one made and the credit lines applied for till date. With each hard inquiry i.e. an application of loan, the score drops by 10-15 points. So, it, in turn, affects the score and which will affect the loan application. Which may also some times get the sore low and one has to face the consequences of low cibil score.
One must always be a little patient when working with a credit line.