How Much of a Gap Should You Have Between Two Credit Applications?
Last Updated : Aug. 5, 2020, 7:58 p.m.
Many times lenders reject a loan application on grounds that the gap between two credit applications is not much. Inevitably, the credit score would have reduced if you have faced rejection earlier. And when you apply for a new loan quickly, the scope for loan rejection remains higher. If the loan does get rejected, chances of credit score going further down become prominent. So, there has to be a gap between two credit applications, particularly if you have faced rejection earlier. But how much of a gap should there be? Read this post to know the same.
Decide the Gap Based on Your Credit Report Findings
Well, there’s no definite answer to how much of a gap you should have between two credit applications. But when you have faced loan rejections, you will do well to check your credit report online . The credit report is a summary of loan or credit card payments and indicates your efficiency in managing debts. A credit report is provided by various credit bureaus in India, such as CIBIL. If you are wondering how you can request the CIBIL to give you your credit report, let’s be told you can do that at Wishfin, the official partner of the renowned credit bureau. All you need to do is to create an account at Wishfin by mentioning a few personal details.
- Visit www.wishfin.com
- Click on ‘ CIBIL Score ’
- A page will appear asking you to mention your details
- Enter your First Name as per your PAN Card
- Mention your Middle Name and Last Name
- Enter your Date of Birth (DOB), Gender, PAN Number, Net Monthly Income and Company Name
- Tick your Employment Status – Salaried or Self-employed
- Mention your Mobile Number and Email Address
- Click on the ‘Submit’ button
After that, mention a few or loan or credit card details, whichever you may have. You will be able to create an account only when all these details are verified successfully.
Once the account is created, you can log in to check your credit score . Check out the login steps below.
- Enter either your mobile number or email address
- Enter the One-time Password (OTP)
- Click on ‘Login’
Once you do these steps, you can see your credit report indicating the credit score you may have. The credit report also highlights the reasons for a low credit score. Most of the time, it’s the poor repayment track that accounts for a poor score.
Ideally, your credit score should be 750 and beyond to get an unsecured loan or credit card. Whereas, a credit score won’t have much bearing as far as the approval of secured loans such as home loans is concerned.
So, if you require an unsecured loan such as a personal loan and your credit score is quite down, you need to wait till the time the score goes up to the desired one. If your credit score is 600, you may require a year and more to get the score back on track should you pay your ongoing loan or credit card dues on time. So, you can understand the gap that you should have between two credit applications in case your credit score is not good.
Your Income & Overall Financial State Also Dictate the Gap Between Credits
Having more than one credit means multiple obligations for you to make. This will increase your expenses and reduce your savings. So before you apply for a new loan, see whether you require a loan. If the need is not urgent, you can do away with a fresh loan application. Plus, if your income is not that high, having more loans will only put pressure on your finances. Check whether you have the savings to fulfill your needs. If so, don’t hesitate to use the same and fulfill your needs. Once the income increases to a level that you can afford more than one loan obligation, apply for the fresh credit. This way, you can identify the gap between different credit applications.
What Does the Lender Want to See Before Approving a Fresh Credit?
Not only does the lender see the credit score of an individual, but it also sees how efficiently the concerned person has managed loan or credit card payments over time. If we go to the basics, a credit score is built based on the repayment track of at least 6 months to a year for someone new to the credit world. Assuming the loan or credit card you have now is the first-ever credit experience for you, ensure timely payments from your end by saying No to unnecessary expenses.
So when a lender checks a solid repayment track for a considerable length, it will have no hesitation in approving the credit provided you have sufficient income to pay both the existing credit obligation and the new one. As a borrower, look to have a gap of at least a year between the two credits. With such a gap, it will sit pretty well on your credit report. The credit bureau will have enough time to figure out your debt management skills. Plus, the yearly remuneration can give you extra to pay towards more than one loan with ease. But the bottom line remains – Apply for a loan or credit card only when you need it.
What Can You Get in a Fresh Credit If You Apply on the Back of a Good Credit Score?
A lot of benefits will greet you when you apply with a good credit score. You can get impressive loan amounts at a lower rate of interest. A pre-approved personal loan can also be given to you. Here, you won’t even need to apply. A mere consent to the loan offer will do for you. Top-selling credit cards with an impressive rewards structure, massive cashback and discount offers can also be offered.