It is common knowledge that Personal Loans can be availed to tide over an immediate requirement for funds and can be used for a variety of reasons from providing financial support in case of a medical emergency to taking a vacation. While personal loans are by and large easily available, it is not uncommon for a personal loan application to be rejected, or in case of P2P Lending, even after listing lender interest in offering funding may be low due to various common reasons as listed below.

Insufficient employment record or income

Your income and the time you have worked in your organisation plays an important role in lenders deciding with regards to the approval or funding of your loan request. If you wish to get a personal loan, minimum three years of work experience and at least a year in your current organisation, goes a long way in securing credit. While assessing your Loan Eligibility, lenders will assess the stability of your job before deciding whether or not to extend credit. If you have a temporary job profile, are on probation, or are in-between jobs it may turn out to be a difficult task to get a personal loan as lenders prefer Borrowers with stable and regular flow of income.

Incorrect details

While checking your eligibility to service loans the lender will ask you to furnish various documents and ask to fill out some forms by way of application. If the details that you provide turn out to be incorrect or insufficient as per the standards set by the lender, your application may be turned down. Have some basic documents like aadhar card, bank statements, salary slips and ITR helps.

Rejected loan application or a default in the past

Your credit score and report play an important role in deciding your loan’s fate when the lender is assessing your eligibility for a loan. If you have been denied credit earlier or have defaulted on a previously accessed credit line, it will show up on your credit report and diminish your chances of getting a personal loan. To avoid getting into such a situation, make sure you make a continual attempt at maintaining a high credit score by making timely payments on loans taken in the past.

A poor credit score or bad credit history

As pointed out earlier, your credit history plays a vital role in assessing your eligibility for a fresh line of credit. If you have a history of credit card defaults, not making timely repayments, have a credit utilisation of over 40% (credit utilisation is the total amount of credit you use as against the total amount made available to you) it is likely to reflect poorly on your credit score. Bad credit history and bad credit score is another reason why you may not get a personal loan.

However, those with not such a flattering credit score do not need to lose heart. Personal loan with bad credit are a possibility in the modern day and do not have to go from pillar to post looking for one! All you need to do is register on a peer to peer (P2P) lending platform to access personal loan with bad credit. These are platforms that bring together private investors and borrowers on the same platform. Even if you do have good credit, P2P lending platforms are able to get you a better deal on your personal loan than the one you would get from a bank. You could take advantage of the lower interest rates or higher eligibility on your loan amount from these innovative P2P lending platforms.

P2P Lending platforms such as Faircent.com do not rely on traditional methods of credit assessment and access several atypical new-age data points. As a result, they are able to bring in larger base under the purview of organized credit. By bringing Borrowers and Lenders directly in contact and hence removing intermediary margins Borrowers can get loans at lower cost and lenders make more money as compared to other investment options.

Thus, while use of high-end technology in the Financial space, is making organized credit available to more and more Indians, it’s important for Borrowers to bear in mind that credit assessment will be carried out thoroughly and loan will only be approved if credentials are deemed fit. It is thus essential to be sure of your repayment capability before you apply for any loans.