With the Corona outbreak hitting the incomes and jobs of those working professionals in various sectors are directly affected. COVID-19 has taken a toll on people’s employment and income, whereas lending institutions such as banks have come up with some stricter lending criteria. Bankers are wary and unwilling to take risks about the repayment ability of borrowers and constricted norms.
Shivar and Upadhyay are among those individuals or borrowers who have taken complaints of loan rejection to social media recently. Mohit Shivhare, a Pune based employee, had applied for a Home loan in February, but his application got rejected recently. The loan processing got delayed when Shivhare changed his previous job in March before the entire country went into lockdown. In May, a few days later, his loan application was got rejected. “The Loan has denied by the bank saying that the Norms had changed.”, stated Shivhare.
S.C. Upadhyay, from Surda, Jharkhand, applied for a personal loan with some public sector bank. He has had a salary account for the past 12 years. The bank rejected the loan, stating that the company was an unregistered one.
Norms have toughened for secured loans. Bank considers various factors before sanctioning loans like your age, income, your company, the sector you work for, and your credit score. They will be re-evaluating the reparation ability of the borrowers.
For secured loans, only Large company employees are getting considered whereas, self-employed people are finding it difficult to procure loans. Non-Banking Financial Companies are pleased to serve their current customers as it is difficult for them to value the new customers.
The only way out is to avoid loan rejections and increase your eligibility, especially if you are planning to get secured loans such as a home loan is by Clearing existing Dues and checking your credit report. Lenders do look at EMIs of ongoing Loans that were about to end within six months, so repay the last few EMIs of current ongoing loans before applying for a New Loan.
Monitor your credit report because few public sector banks usually lend to people only when the credit score is 700 or more. The Credit Score requirements are higher in some private banks. You will be incapable if your credit score will be low due to failure or missing installments, so check your credit utilization rate.
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