Who Is Not Issued Personal Online Loans and Why It Happens
Who Is Not Issued Personal Online Loans and Why It Happens
By applying to the bank for a loan, a borrower prepares for the worst – to be rejected. Clients of microfinance institutions are more likely to succeed – 90% of applications are approved, but still, there is a chance of being among the 10%. Both beginners and experienced borrowers are at risk of hearing “no” from MFIs. Why a microloan is denied cannot be clarified, since financial institutions do not explain the reasons for a negative answer. However, it is possible to highlight a few main points.
Who Can Be Denied?
Sometimes customers applying for an online loan are rejected because they do not meet the criteria for obtaining credit in terms of social status. The risk group includes:
* People under 18 years of age.
* Individuals who do not have a permanent place of residence.
* Persons with unstable income and negative credit history.
* Borrowers who do not provide all the necessary documents or whose copies are of bad quality.
* Clients with unpaid debts to other financial organizations and banks.
Other Reasons for Rejection
Sometimes even clients who fulfill all the conditions may be denied a loan. This is due to the fact that lenders closely monitor portfolio risks, i.e., borrowers’ ability to repay loans on time in accordance with the terms of the contract. In this case, there can be several reasons: a customer has no guarantor; his income is lower than expected; he has not fulfilled the terms of other loan agreements, or the bank believes that the borrower will not be able to repay his debt.
It is important to remember that banks and MFIs want to receive their money back in full, so if a potential borrower does not meet all criteria, it is better to look for other lenders or find alternative options. Although being rejected by one lender does not mean that you won’t get approved by another. Each case should be considered individually.