When you apply for a personal loan in Dubai, you will often encounter several factors that determine whether you’ll get approved or rejected. These factors include your credit score, debt-to-income ratio, and credit utilization ratio. This article will go over each of these factors and what you can do to improve them. We’ll also cover the important role that collateral plays in your application. However, the most important reason for getting rejected is often a lack of information.
Credit utilization ratio:
Applying for a personal loan with no deliberation is bound to be rejected. Here are some reasons why your application may get rejected. Having too much credit or too many loans may hurt your chances of approval. You can improve your chances of approval by lowering your loan balances. Ensure your ratio of secured to unsecured loans is less than 80%. If it is too high, your loan application will be rejected.
Due to the debt-to-income ratio:
You’ve probably heard about the debt-to-income ratio, but how do you avoid making this mistake? Debt-to-income ratios are important in approving or denying a personal loan application. Lenders calculate your debt-to-income ratio by comparing your monthly debt payments with your gross income. If your debt-to-income ratio is high, you will be rejected unless your income has increased significantly.
You may have been declined for a personal loan due to collateral requirements. If you’re considering reapplying, you should check your credit report for mistakes before submitting your loan application. The reason why collateral is required is to protect the lender. A high DTI may cause your application to be rejected, as lenders often reject high DTIs. You should also check your credit utilization ratio – if you use too much of your credit, you’ll likely get turned down for a personal loan. It would help if you aimed to use less than 30% of your credit limit.