CIBIL TransUnion is a credit bureau in India that provides a free credit score once a year. When you request for a loan from a bank or non-banking financial institution, the lender will assess your lending capacity based on characteristics such as your income, age, salary, and credit score. Your credit report includes your credit history as well as your payments history.
When a bank or NBFC rejects your loan application, it could be due to your poor CIBIL score. There is no loan without CIBIL. The rejection would cause the CIBIL score to plummet even further. And the rejection reduces your prospects of borrowing even further. Poor CIBIL could be due to debt non-payment, debt settlement, excessive credit utilisation, and other factors. Your low credit score could be due to a variety of factors, and CIBIL TransUnion can help you improve it. Customers can sign up for premium CIBIL plans and study their credit records to figure out what’s causing their poor score.
The Influence of Loan Rejection on Your CIBIL Score
When you apply for a loan, the lender conducts a credit check, often known as a hard inquiry. This has an impact on your CIBIL score, so be cautious while applying. Your credit score will suffer as a result of the rejection. You must determine the reason for rejection so that you do not repeat the same error.
Reasons for Loan Denial
Your low CIBIL score could be attributed to a variety of factors. Before applying for loan you should once go for online CIBIL score checking. Check your credit report to find out what factors influence your credit score. See the tips below to learn about the most prevalent causes of a low CIBIL.
Many Loans: If you have multiple loan accounts in your name, banks are less likely to approve your loan owing to increased credit risk. Furthermore, your CIBIL score may suffer as a result of your continued reliance on loans.
Defaulted Loans: If you have fallen behind on loan payments and are a co-applicant or guarantor on a loan, your CIBIL score will suffer. Furthermore, if you apply for a loan with a default history, the bank may reject your application. Instances of late salary credits may also result in rejection. If this occurs, the credit score will suffer. Banks make loans to consumers that have a stable income and have valid documentation and documents.
The Influence of Loan Rejection on Your CIBIL Score
Rejection is never fun, but there are things you can take to minimise denials and enhance your chances the following time. When you apply for a loan, the lender conducts a credit check, often known as a hard inquiry. This has an impact on your CIBIL score, so be cautious while applying. Your credit score will suffer as a result of the rejection.
To begin, try to determine why your application was declined. Many things could have contributed to this, including your credit score, credit history, income, or work status. Alternatively, some creditors may have their own set of restrictions that result in the denial.
The lender is required by law to give you an adverse action letter stating why you were denied credit. It must also tell you how to get a free copy of the credit report that was used to make its decision. You may wish to consider applying for a loan or credit card from a different lender, depending on the cause. If you continue to encounter difficulties, you may want to take a step back and prioritise improving your credit and paying off debt. While some creditors provide loans to those with weak credit, the loans often carry exorbitant interest rates.
As a result, as a last note, we would like to emphasise that you should only apply for credit when you are in desperate need, and only for the amount that you can comfortably pay off.
