5 Reasons of Why Credit Application Rejected

Basically, the best attitude in dealing with debt is to not take it. Free of debt in addition to making your financial health also makes life more calmly. Besides applying for loans money to banks is not an easy thing. Many people feel is compliant, but still rejected. Here are some common reasons why your credit application rejected by the bank.

1. Bad credit history.
This occurs if you previously had a bad record history of debt repayment in the past. For example, you have unresolved arrears at the bank A, then applying for loans in the bank B. Chances are that you add a loan in the bank B will be rejected. Because of course the bank B does not want such a bank A that lost their money.
Usually the debt payment history of customers of the bank or other financial institutions is usually registered in a country's central bank. So, once you submit the credit or loan application form to the bank, the bank will verify the central bank to know the history of previous loan payments.

2. Improper collateral .
The collateral is a loan guarantee of land, buildings, vehicles, or other asset type deemed appropriate by the bank. Collateral is intended as a guarantee by a bank can be seized and sold separately for the closing balance of bad loans. This assurance is needed to minimize the risk of bad debts. So if the bank rate that it is not suitable enough collateral in accordance with the loan amount that you add, the more likely your application is rejected.

3. The less ability to return loans.
You should be able to show the bank that you have the revenue went to use the loan repayments. The tip is the total of the previous installment (if any) plus the new loan repayments do not exceed 30% of your total income.

4. Have no own capital.
By the time you apply for a loan, banks usually financed only 70% of the total loan needs. The rest should be sought by the debtor. This is intended to consider the moral hazard, which if the debtor itself also try to sought for as much as 30%, at least can provide a sense of responsibility of debtors to repay their loans overall. This is why to borrow money need money.

5. Employment situation does not support.
Economic conditions affect the performance of the business world. At the time of financial crisis going on, there are several business sector most affected such a large textile industry, automobile, etc. If you work in the field of business affected by the financial crisis, banks will be extra careful even reject your application due to the risk level of your debt payments breakdown of income due to stop.

Likewise, there are several types of specific jobs with high risk profiles such as the police or the pilot who has high risk accident rate.

If you feel that of all the above exposure you can fulfill enough, and then please apply to bank loans. But conversely, if you are not sure about your financial situation, then consider postponing your application first.

Better loans or a debt that you have is a productive loan. Debt you may get used for productive things like to open a new business. So your obligations to pay can be helped from the cash flow and profits of business you run.

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