Before you apply for a loan again, fix these gaps in your profile

Has your loan been rejected recently? If yes, you can reapply, but make sure you minimise (if you cannot eliminate completely) your chances of loan rejection the second time. And to make that happen, you are advised to follow a few simple steps. 

Almost all these recommendations are aimed at propelling your credit score.

Follow these steps before applying for a loan again

Stabilise your income: Lenders won't only judge your income. They would assess your overall financial stability.

Secured credit card: If you do not have a credit history, you can apply for a secured credit card and build your credit history. If you can, take a small loan and repay it on time to build your credit history.

Keep your old accounts active: Since the length of credit history matters, you can keep the accounts that you opened long ago active. You may want to use them once in a while for making small payments.

Avoid sending too many applications: One simple and effective way to get your loan application accepted is to avoid applying for too many loans.

This is because each loan application triggers a hard inquiry, which is harmful to your already struggling score.

Bring your utilisation down: If your credit utilisation is on a higher side (above 30%), you need to bring it down by paying back some of your loans. This is nothing short of a magic bullet.

Avoid missing a payment: After your loan was rejected because of a poor credit score, make sure you never miss a payment again. This is considered one of the biggest reasons for a drop in credit score. Skipping payments right before a loan application is a recipe for disaster.

Disclaimer: MintMoney has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. MintMoney does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

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