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Small personal loans are excellent relief in times of financial hardship. Applying for small loans is quick and easy and is usually characterized by a high success rate. However, there are some instances where small personal loan applications are denied. If you’re looking to apply for a small personal loan, it helps to work with an online lender with a streamlined process that requires minimal documentation to increase your chances of success. KreditBee is a premium online provider for cheap instant loans tailored to your needs. Here are some of the most common reasons for loan denials:
1. Multiple hard requests
Every time a potential borrower applies for a loan, the lender asks about their creditworthiness. Several such requests in a short period of time indicate that the person is under financial strain. As a result, credit institutions are prevented from granting the borrower a small loan. If you are looking to get a small loan, it is advisable to only apply for one lender to increase the chances of the loan being approved and disbursed without affecting your credit score.
2. Low credit rating
This is child’s play. A low credit score significantly reduces a borrower’s chances of availing an affordable loan. A low credit score indicates a poor repayment history or defaults. It discourages lending institutions from lending and often leads to rejection. Maintaining a healthy credit score is essential to availing small personal loans and other types of credit.
3. Incomplete Documents
When applying for a loan, it is important to submit all the required documents. The absence of documents such as payslips or identity documents can lead to the rejection of the application. Offline loans from banks usually require more documentation and other evidence. This scenario increases the chances of missing some important papers, leading to the loan denial. By going with a reputable online lender, you can benefit from a fast payout process for loan applications with minimal documentation. It’s also easy to submit missing documents without disrupting the application processing schedule.
4. Low salary
A low salary usually indicates a low ability to repay. If a potential borrower’s borrowing needs exceed their estimated repayment capacity, lending institutions may be reluctant to approve such a loan. It’s wise to apply for loans that are less than your total income so you can repay on schedule.
5. Currently high credit utilization
Maintaining healthy credit utilization is critical to taking out credit in times of need. It is advisable to stay below 30 percent of your total credit capacity. Applicants with an existing stack of loans are less likely to receive loan approvals, especially if the total loan value exceeds 30 percent of their credit capacity.
Small loans are available for a number of reasons which means they are always in high demand. Avoiding the mistakes discussed in this blog goes a long way in protecting your application from being rejected. KreditBee is your one-stop shop for instant personal loans. To discuss your small loan needs, call 080-44292200 or email [email protected]