Bank Loan: Getting a loan is not always easy. Banks check your financial background before they approve your loan. If you make certain mistakes, your chances of getting a loan will become very low. It’s important to know what these mistakes are so you can avoid them.

Bank Loan:
1. Missing EMI Payments

If you take a loan and don’t pay your monthly installments (EMIs) on time, your credit score will drop. A low credit score means the bank will not trust you to repay the loan. Missing one EMI is bad, but missing many EMIs is worse. It shows that you are not responsible with money.

2. High Loan Amount Already Taken

If you already have a big loan and you apply for another one, banks may not approve it. They think that you already have too much debt and may not be able to repay another loan. This also lowers your credit score.

3. Applying to Many Banks at the Same Time

If you apply for loans from many banks at the same time, each bank will check your credit score. These checks are called “hard inquiries.” Too many hard inquiries can bring down your score. This tells the banks that you are desperate for money, and they may reject your loan.

4. Pre-Closing a Secured Loan

Sometimes people want to close their loans early. This is called pre-closing. While it saves interest, closing a secured loan (like a home loan) early can also reduce your credit score for a short time. The score usually improves later, but it may affect new loan applications.

5. Using Too Much Credit Card Limit

Using a credit card is normal, but if you use more than 30% of your card limit, it can lower your credit score. It shows that you are depending too much on credit. So, try to use your card wisely and always pay bills on time.

6. Applying for Multiple Credit Cards

Applying for many credit cards frequently can also harm your credit score. Each application adds a hard inquiry, and too many can make you look risky to banks. Even though the impact is temporary, it may reduce your chance of getting a loan soon after.

7. Closing Old Credit Cards

If you close an old credit card, your credit utilization ratio will increase. This means you are using a higher percentage of your total available credit, which can reduce your credit score. It’s better to keep old cards open, even if you don’t use them often.

If you are planning to take a loan, first check your credit score and avoid these common mistakes. A good credit score shows banks that you are trustworthy. Pay your EMIs and bills on time, manage your loans and cards wisely, and don’t apply for credit too often. These small habits can help you get a loan when you need it most.

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