Are you finding it hard to get a loan approval? Or unable to impress your lender for a quick approval? Whatever could be the reason. We’ve got your back. By the end of this article, you will come to know-
So, please sit back, relax & while you enjoy your coffee or tea; we uncover some hidden secrets of the approval process.
Mayank works for a multinational company in Gurugram, earning six figures every month. Having a lavish lifestyle, he owns a luxury car. He recently met with a girl, fall in love & both decided to get married. But there is a problem as Mayak’s been residing in a rented penthouse. But his partner is seeking her residence. Eventually, he decided to buy a home near his workplace.
He approached a high-profile bank and applied for a home loan. But suddenly, the situation became traumatic as he got a text alert that his bank didn’t approve his home loan application. He asked for a justification from the bank staff but got an automatic response that at present, they’re unable to process his home loan application.
Later on, he visited another bank but there as well; he got a response through email. “Your Loan application has been evaluated in line with the bank’s internal credit policy and operating/credit processes. Based on the above, we at this moment state that we cannot offer you the credit facility as the same does not meet our credit parameters/requirements.
On the other hand, Rahul works for a private firm, earning only 30k a month. He also decides to get a home loan. He visits a bank, fills an application form, and successfully gets the sanction letter in just five business days.
You might be thinking about how this is possible. A person earning a lac per month didn’t get the loan approval, but a person just making half of it reached the sanction letter. Stop scratching your head & keep following to know the real mystery.
Bank or NBFC analyzes several factors before approving a credit facility. It could be a personal loan, home loan, or minor consumer loan. The process of approval is almost the same. Only a good CIBIL or credit score isn’t crucial for the approval as various other factors can put a red flag on approval.
The moment you submit a loan application for any credit requirement, the first thing your lender looks at is the current balance. It is the total outstanding balance across all your active loans/credit cards. For example, you’ve four active cards with a credit limit of 50,000, 70,000, 90,000 & 100,000 respectively. In an emergency, you swiped all four cards for 45,000, 60,000, 80,000 & 95,000. Now, the total amount you swiped all your cards for is the current balance.
It may also include any other balance like any outstanding for a personal loan, home loan & loan against property.
Having a high current balance may invite financial difficulty in the future. And the bank doesn’t want you to settle the account later on as they lose profit.
Days Past Dues or Late Payment is another crucial factor your lender analyzes before approval. It’s the count of your late payments in the last 36 months. While finalizing your loan application, any value greater than 0 will negatively impact your credit health or financial discipline. Your single late payment, no matter whatever the reason will reflect in your credit profile.
It is the total number of credit inquiries you have made in the past 36 months. In simple words, the number of loans & credit cards you’ve applied for in the past 36 months. Too many inquiries quickly show your credit-hungry behavior & it invites a red signal to your lender while evaluating your loan application.
Your source of income or monthly gross income plays a crucial role in the pre-approval. If you switch your job frequently, or recently joined a startup, it can invite a financial stability issue. Also, if you work with a BPO or any target-related jobs, chances are that your loan application most probably will be rejected. The reason is, jobs in BPO or similar industries aren’t stable and people tend to lose the job easily compared to other industries.
It’s the duration of your credit history available when you got your oldest credit card or loan. If your bank is unable to see any depth of credit, they may not approve your case.
The other most crucial factor affecting your loan approval is the multiple active accounts at the same time. Suppose your salary is 50,000. You already pay Rs 15,000 for an auto loan, Rs 10,000 for a personal loan, Rs 8000 for durable consumer loans, and you apply for Rs 50,000,00 home loan. Your lender will straight away deny the credit facility or will offer you a lower amount you requested.
Even if you have a good credit score, attractive salary too still your lender can deny offering you any credit facility. To enhance the chances of quick approval, you need a loan consultant. Yes, your consultant is capable enough to work with you not only to get speedy sanctions but also to enhance the chances of getting loans in the future too.
Fair Fincorp is one of the authorized channel partners of multiple lenders in the country and doesn’t rely on the traditional method of credit assessment. If you’re also battling with banks & NBFC for credit facility & see no hope, then we can be your partner in the journey. We’re just a call away. Call 9897666966 or log on to www.fairfincorp.com for more information.
[ Also read: Business Loan in Dehradun | Loan For Business in Dehradun ]