Top Reasons for Personal Loan Rejection
Who likes to wait in a long line, and then be told, you’re not eligible? We demystify the top reasons for Personal Loan rejections here.Taking Personal Loans is one of the best ways to finance your immediate requirement for cash. Banks or any other financial institutions however, will verify your profile against strict lending criteria, before approving a loan application. Getting a Personal Loan is therefore not easy and having a good credit history is extremely important.
Your credit score is determined by the Credit Information Bureau (India) Limited or Credit score. Sometimes though, your Personal Loan can be rejected even if your CIBIL score is high.
Here are Some of The Reasons For a Personal Loan Rejection
Your income plays a major role in influencing the bank’s decision. If your income is unable to sustain your monthly repayments then your application for a Personal Loan is likely to get declined. The bank will also check your job profile to assess the stability of your current job. If you are on probation, have a temporary job, or are constantly switching jobs, you may not get pre-approval from your bank. If, however, you lose your job between the time you apply for the loan and the time your loan gets finalized, or if there are any other changes in your financial situation, the bank would have enough reasons for a loan denial even after giving you a pre-approval.
Banks will also consider the financial situation of the company you are working for. In addition, if you are already paying EMIs on another loan, then your income minus the EMI will be considered for the approval.
Bad Credit History:
Before lending any amount, any lender, whether a bank or another financial institution, will first verify your credit history. Defaults on loans taken earlier, loans that are overdue, court judgments, skipping EMIs, as well as late payment of electricity, telephone and credit card bills are all factors that impact your credit history. If you have been a loan guarantor to someone who defaulted, the bank will consider you as accountable.
Also Read : How to get a Personal Loan with bad credit
All the details provided on your application will be verified. If any incorrect details are provided, the bank will have a good reason to reject your request.
Previously Rejected Loans:
A loan application that has been previously denied gets reflected on your CIBIL record. This greatly reduces your chances for a loan approval. It is therefore advisable to hear from one bank before you apply to another. This gives you the opportunity to raise your credit score and apply again.
Also Read : How To Raise and Increase Your Credit Score
To avoid your loan application being rejected, always check your credit score before applying. You can get a copy of your credit record from CIBIL and sort out any issues thus found. Moreover, you must find out your bank’s requirements for getting a Personal Loan. For instance, you can ask your bank what is the minimum income required for a Personal Loan. Lastly, always validate all the eligibility details and documentation that you will be providing to the bank.