Personal Loan Rejection Reasons
This is why bank rejected your personal loan, Get assured personal loan by knowing how bank decide personal loan sanction
Personal loan rejection reasons: Have you ever tried to avail a personal loan and banks rejected loans? If the answer is yes, then you might have not taken care of some of the main facts. This is a fact that every lender checks the credibility of applicants. The lenders sanction loans after verifying various aspects of financial health and condition of an applicant. In this article, I have described the main reasons for personal loan rejection.
1. The first and foremost reason for personal loan rejection is Credit Score.
Credit score is assigned by credit agencies in India which are CIBIL, Equifax, Experian, CRIF mainly. Credit score ranges between 300 – 900. Nearest to 900 is a stronger score. If any lender has rejected your personal loan application, this may be one of the reasons for personal loan rejection. There is a limit set by all lenders which is called threshold limit. Below this threshold limit lenders restrict themselves to sanction a personal loan.
Read about How to improve your credit score and how it can help you financially.
Complaint against Bank with Bank Ombudsman
Another aspect of credit score is that you do not have any credit history. Some of the lenders sanction loans to people who have a good credit history. If you have never availed any credit facility before, your credit score will be -1. Although, this is neither a bad score nor a good one, some lenders may hesitate to a person who do not a track record of good repayment.
Read What does -1 CIBIL score means? How it can be improved.
How To Set Up And Make Offline UPI Payments
2. Next reason for personal loan rejection can be your high existing credits.
Yes, this may also be one of the reasons for rejection of personal loan applications. When a person avails many credit facilities at a time, his/ her repayment capacity for new loans can be affected. Lenders consider you as financially overburdened and hesitate to sanction more loans. As the chances of a financially overburdened person to default a loan are higher, and risk to the loan gets higher, the lender does not sanction new loans to the person. Hence it is always advised to avail loans and credit cards as per your repayment capacity.
How to manage EMIs and repay loan smartly
Everything about GST – Goods and Services Tax
3. If you have switched many jobs in your career, this may affect lenders’ decisions.
Lenders want their money to be safe and repayment of the loan regularly. If a person does not have stability in his career, he may face difficulty in getting a personal loan. Most of the lenders want to sanction personal loans to the people who are working with reputed companies. As the employers check the background of employees before hiring, the risk of default is less in employees of well rated companies. Hence it is advised to maintain a good employment record, regular income, and work with good companies to maintain your creditworthiness and get a personal loan in need.
4. Income criteria is not up to lenders’ expectations
Many of the lenders have set income criteria and minimum income parameters to sanction a personal loan. This is the reason why all lenders prefer to provide loans to people who work in reputed companies and have regular income. The businessmen and freelancers do not have high chances of getting a personal loan easily. Sufficient and regular income indicates that you have a good repayment capacity. Hence a person should calculate personal loan eligibility. You should have a conversation with the lender about the terms and conditions on income criteria.
Banks in India: Government Banks | Private Banks | Digital Banks | Foreign Banks| List of all banks
IFSC and MICR of all banks in India
5. Another reason for personal loan rejection can be a high number of enquiries in your credit report.
If you have submitted your personal loan application to many lenders at a time or you are regularly trying to get a personal loan, you can harm your credit report. The credit agencies keep a strict eye on the enquiries made by lenders. Specially, personal loan and credit card enquiries are considered as harsh enquiries. This reflects that the person is in bad financial status and does not have repayment capacity. The harsh enquiries have a direct impact on your credit score. Higher the number of harsh enquiries lower the credit score. Hence always decide whether you really need funds and are eligible enough to avail a personal loan, then apply for it.
Instant personal loan and their impact on your CIBIL
Online Bike Insurance Claim Process and Documents Required to Claim Two Wheeler Insurance?
6. Submission of incorrect documents or missing of necessary documents.
One should always provide genuine documents while applying for a loan. Lenders deeply verify the records and documents you provide. Do not alter the facts or try to mislead the lenders. Always try to submit all the documents required for availing a loan. You can ask for a list of documents which the lender requires before applying for a loan. By doing this you can avoid rejection of loan applications. Do not try to fool the lender to get a loan. Lenders have many tools to check the genuineness of your facts. Hence, I advise you to be honest to the lender when you apply for a personal loan.
7. Incorrect application form or incomplete application form.
When a lender asks to fill up a personal loan application, we generally do not care much about filling the complete application. Many times, being in a hurry, we fill incorrect details in the application form. This may lead to reasons for personal loan rejection. The application form is designed to gather complete information about a person opting to avail a loan. The application has many terms and conditions which you should carefully read and understand before signing it. Lenders want to remain safe when they need to face legal action. Hence fill a complete application and provide genuine information while applying for a personal loan.
Conclusion
After reading the above article you must have understood the main reasons for which lenders reject personal loans. You can more carefully with full preparation apply for a new personal loan by keeping the above points in mind.
Read more articles
- Personal Loans, advantage and disadvantage
- Credit Card, It’s benefits and negative factors
- Government Business loan Schemes
- How to manage EMIs to pay back less
- Credit Card Bill Minimum due amount impact
- Instant Personal Loan Impact on CIBIL
Read Category-wise posts
Banking | Bank Account | Bank Deposit Schemes | Loans | Bank Cards | Credit Cards | Debit Cards | Search IFSC & MCLR Code | Insurance | Bank Jobs and Exams | Stock Market | GST | EMI Calculator
