Thinking about the unknown loan approval obstructions arising is a nightmare. That is why we bring you some key issues in it, some of them are:
Applying for multiple new loans in a short time:
The fact of obtaining multiple loans could is one of the loan approval obstructions, even if you have paid all your EMIs and debt.
Applying excessively for loans could draw the credit score down because it can be seen as an aggressive risk-taker habit. Applying for several loans and credit cards can have an adverse effect on the decision that the loan of the corresponding person should be approved or not.
In a simpler way, one can say that it would mean more queries are added to your credit report, which can have harmful impacts on an individual’s credit score.
Not having an adequate mixture of loans:
It would be more sensible to have a good mix of all kinds of loans to avoid loan approval obstructions. Having a proper mix of revolving debt and installment debt is necessary.
If an individual’s loan collection is in favor of unsecured loans or personal loans, then it is viewed with carefulness by the banks as it is a sign of unbalanced fund flows.
Shutting of the loan account often
Closing of liability is thought of as good but frequent termination of loans can bring down the credit score.
Once a person has availed of a loan, it is advisable to stay with it for at least 12 months before concluding it. A high rate of “opening” and “closing” a loan account affect the credit score.
Credit limits over usage
All credit cards have some credit limits. If one is too close to violating this limit or violates it then, the credit score will suffer.
While higher spending on the credit cards may not essentially harm the score but an increase in the present balance on the card over time indicates an increased refund burden and may negatively blow the credit score. It is always sensible not using too much credit to avoid loan approval obstructions.
Defaulting On Previous Loan Repayments
It is the main cause of an unfavorable credit report and a poor credit score resulting in loan approval obstructions. About 35% is the reimbursement history weigh in credit score.
If you have not paid for a long time than it affects your credit score the most. So, it is better to clear all dues before applying for a loan.