Personal Loan Approval After Multiple Applications

Getting a Personal Loan approved after multiple applications is possible, but you need to be very conscious and strategic while applying. Making frequent applications is perceived as ‘credit hungry’ and flags your profile as risky. But can you rebuild your financial profile and reapply successfully after multiple applications? Let’s find out with the help of this blog!

How to Get Personal Loan Approval After Multiple Applications
 

If you have applied to several institutions for a Personal Loan and have been rejected, your immediate priority is to halt the cycle. Further applications will only worsen the situation. To strengthen your position, you must take firm actions in a deliberate and planned manner. Follow these steps for a successful loan application down the line:

Institute a ‘Cooling-off’ Period Immediately
The first and most crucial step is to stop applying for any further credit. Try to establish a personal cooling-off period of at least three to six months. When you apply for credit, it triggers a ‘hard enquiry’ which temporarily lowers your score. Multiple enquiries can have a heavier impact on your score, and it also signals financial desperation to lenders.

Additionally, the Reserve Bank of India (RBI) has mandated a 15-day rule for all lenders to update credit bureau records, instead of just once a month. This means lenders get updates on your borrowing activity much more frequently, further emphasising the importance of stopping all applications entirely.

This pause prevents any further damage to your credit score arising from more hard enquiries. More importantly, it signals to all credit bureaus that the period of financial turmoil or urgent credit-seeking is over. This period is when your profile can begin to stabilise.

Analyse Your Credit Report to Understand Past Rejections
During the cooling-off period, your primary task should be to obtain in-depth knowledge of your own financial status. Ensure you get a complete and detailed copy of your credit report from a reputable bureau, such as CIBIL.

You need to analyse it to understand the real reason for rejection, which could go deeper than just multiple applications. Look out for issues such as a low CIBIL score, a high Debt-to-Income (DTI) ratio, any late payments reported, or errors to be corrected in your personal credit information.

Also Read: 10 Common Personal Loan Application Mistakes to Avoid

Rebuild Your Eligibility

Once you’ve identified the issues in your credit report, view the waiting period as an opportunity rather than an obstacle. Use this time to actively work on improving your credit profile by reducing your current debt obligations, making timely payments on existing loans or credit cards, resolving repayment issues with lenders, and other similar actions. Stay conscious of current credit usage, keeping it below 30%.

Lower Your Debt-to-Income (DTI) Ratio

Lenders consider your Debt-to-Income (DTI) ratio to evaluate your loan repayment capacity. It measures the portion of your monthly income that is used to cover debt payments. Higher DTIs imply to the lender that you cannot comfortably afford new EMIs.

To improve this, focus on paying off smaller debts first, especially those with higher interest rates. Every single loan that gets cleared helps lower your DTI and gives lenders a clear testimony that you have enhanced capacity to take on a further loan.

Also Read: How To Improve Credit Score In 30 Days in India?

The Correct Way to Reapply and Secure Approval

Now that you’ve built a stronger financial profile, it’s time to approach the application process with clarity, avoiding past mistakes and increasing your chances of approval.

Research Lender-Specific Criteria Before Applying
You should thoroughly research the eligibility criteria of every single lender you consider before you fill in a single form. Find out their criteria for minimum monthly income levels, acceptable categories of employment, age requirements, and accepted locations. Use the Personal Loan eligibility calculator online, which can give you a strong indication of your approval chances without placing a hard inquiry on your credit report.

Only once you meet most or all of the eligibility criteria should you consider applying. This process automatically narrows down potential lenders, enabling you to focus on the most likely chance of approval.

Adopt a ‘One at a Time’ Application Strategy
Once your research is complete and you have identified a lender whose criteria you are confident you meet, apply to that institution only. Wait for news on rejection before applying to the next. This demonstrates that you’re thoughtful, confident, and reliable, unlike the risky impression created by multiple applications.

Also Read: How to Track Your Personal Loan Application Status

The Risks of Continuing with Multiple Applications

If you continue to apply for loans without giving your credit profile a chance to recover, it can create a downward spiral. Each application lowers your CIBIL score, making it harder to get approved. Lenders may see this as a sign that you’re a high-risk borrower and keep rejecting you, which can harm your credit in the long term and make it even harder to get approved for loans. This can be particularly damaging when you have urgent financial requirements to be met, but are constantly faced with rejection.

Also Read: Get a Personal Loan Easily in Just 5 Simple Steps

To Conclude

By following a strategic approach and building your financial profile smartly, you can increase your chances of getting a Personal Loan approved, even after multiple applications. Once your profile is strong enough, apply with a proper plan in place.
Poonawalla Fincorp offers Personal Loans with an easy application process, minimal documentation requirements, and competitive terms, helping to make your financial journey stress-free.

Frequently Asked Questions

How many Personal Loans can I take?
There’s no limit to the number of Personal Loans you can take during your lifetime. However, be sure that whenever you avail of a loan, your credit history and financial behaviour are in good standing. Additionally, every loan you take should be paid off on time, and you should never apply to multiple lenders at once.

How many Personal Loans can you have at once?
While there’s no limit to the number of Personal Loans you can have at once, most lenders will be comfortable with a maximum of two to three loans. Taking on multiple loans at once can burden you with debt, and you risk defaulting on some of them; this negatively affects your credit score and impacts your future borrowing capacity.

What is the first thing I should do after multiple loan rejections?
The first and most crucial step is to entirely halt the process of applying for any new form of credit. Then, begin a pause period for three to six months to allow your credit profile to stabilise before performing any further actions.

Why are multiple loan applications considered a problem by lenders?
Each application creates a hard inquiry on your CIBIL report, and multiple inquiries in a short period tend to pull down your score. The lenders interpret this as a sign of financial distress, which categorises you as a high-risk borrower.

How long should I wait before reapplying for a personal loan?
A three- to six-month interval is the optimal period after your last rejection. This strategic pause would allow you to analyse further and correct the credit report, enabling genuine improvements in your financial health.

What is the debt-to-income (DTI) ratio, and why does it matter?
Your Debt-to-Income ratio refers to the percentage of your monthly gross income that goes towards paying off your existing debts in terms of EMIs. This gives an indicator of your repayment ability, and a higher DTI is a general reason for loan rejection. This is because it indicates that your current debt exceeds your income, which reduces your repayment capacity.

What is the most effective way to rebuild my credit score?
Consistently paying all existing EMIs and credit card bills on time and in full is the most effective method to rebuild a credit score. Also, try to pay down the outstanding balances on your credit cards so that your credit utilisation is low.