{"id":8421,"date":"2024-03-27T19:15:51","date_gmt":"2024-03-27T13:45:51","guid":{"rendered":"https:\/\/www.newsbey.com\/?p=8421"},"modified":"2024-03-27T19:15:51","modified_gmt":"2024-03-27T13:45:51","slug":"5-reasons-why-your-personal-loan-application-can-get-rejected","status":"publish","type":"post","link":"https:\/\/www.newsbey.com\/5-reasons-why-your-personal-loan-application-can-get-rejected\/","title":{"rendered":"5 Reasons Why Your Personal Loan Application Can Get Rejected"},"content":{"rendered":"
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Banks and non-banking financial companies (NBFCs) consider various factors while assessing personal loan applications. Lenders reject personal loan applicants from those who do not meet their eligibility criteria. Therefore, understanding the most common causes of personal loan rejection can help increase your chances of taking advantage of personal loans. Here are the five common reasons for personal loan rejection:<\/p>\n

Lower EMI affordability<\/strong><\/h2>\n

Personal loan providers consider the repayment capacity of their applicants while assessing their loan eligibility. They generally prefer to grant loan approval to applicants who have their monthly repayment obligations, including their proposed loan personal loan<\/a> EMI, within 50-55% of their net monthly income. Personal loan applicants who exceed the limit can improve their loan eligibility by choosing a longer term and\/or opting for lower loan amounts. This will help to reduce the EMI of their proposed personal loan and thereby reduce their total monthly loan obligations within the limit of 50-55%. Personal loan applicants can use the online personal loan EMI calculators of banks and NBFCs on their websites to know their optimal EMI and tenure for their proposed personal loans based on their repayment capacity. Alternatively, they can also use Paisabazaar’s personal loan EMI calculator or those from other online financial marketplaces. <\/p>\n

Change jobs regularly<\/h2>\n

Personal loan providers consider the employment stability of their potential borrowers when reviewing their loan applications. Those who change jobs frequently are considered to pose a higher credit risk to lenders, and are thus less likely to get approved for a personal loan.<\/p>\n

Moreover, some personal loan lenders also require their salaried employees to have a minimum of 6 months to 1 year of work experience in their current organization. Those who plan to use personal loans in the short term should therefore avoid changing jobs as much as possible.<\/p>\n

Low credit scores<\/strong><\/p>\n

Lenders typically consider the credit scores of their personal loan applicants to assess their creditworthiness. They prefer to sanction personal loans to applicants with a credit score of 700 and above. It is believed that credit applicants with lower credit scores lack financial discipline and therefore pose a greater default risk to lenders. Lenders are therefore more likely to reject the personal loan applications of such applicants. Although some lenders approve personal loan applications for people with low credit scores, they typically charge higher interest rates for such applicants.<\/p>\n

Since you may need to turn to personal loans on a short-term basis to address financial or medical emergencies, you can try to maintain a credit score of at least 750 or higher to increase your eligibility for a personal loan. Potential applicants can improve their credit score by following healthy credit practices such as repaying their credit card bills or EMIs by the due date, avoiding multiple credit card or loan applications within short periods, etc. Potential applicants who have never availed a loan or credit card can use credit cards to build their credit scores.<\/p>\n

Because credit card transactions are considered equivalent to availing a loan, credit card transactions are also reported to the credit bureaus to calculate credit scores. Therefore, using credit cards to make payments and paying off your credit card bills before the due date would help improve your credit score. Potential personal loan applicants can apply for secured credit cards if they do not qualify for regular credit cards to build their credit scores.<\/p>\n

Approach multiple lenders within a short time<\/strong><\/h2>\n

Whenever potential borrowers apply for a personal loan from a lender, their credit reports are requested from the credit bureaus to assess their creditworthiness. Such credit report requests from lenders are known as hard inquiries. Credit bureaus will deduct a few points from your credit score for each such difficult inquiry. Therefore, those who submit multiple direct loan applications within a short period of time may see a significant reduction in their credit scores, reducing their chances of getting a personal loan approved. Therefore, potential personal loan applicants should visit online financial marketplaces and compare offers from multiple lenders before applying for a personal loan. Credit bureaus consider credit report requests from these marketplaces as soft inquiries, which do not negatively impact your credit scores.<\/p>\n

Unsuitable professional profile<\/strong><\/h2>\n

Banks and NBFCs take your professional profile into account while assessing your personal loan applications. Lenders are not allowed to approve personal loans if your professional profile is not included in their list of approved professional profiles. Similarly, lenders may also reject your personal loan application if your employer is not included in their list of approved employers. They can also reject personal loan applications for self-employed people who belong to the negative list of companies\/professions.<\/p>\n

Related<\/em><\/h3>\n<\/p>\n

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Banks and non-banking financial companies (NBFCs) consider various factors while assessing personal loan applications. Lenders reject personal loan applicants from those who do not meet their eligibility criteria. Therefore, understanding the most common causes of personal loan rejection can help increase your chances of taking advantage of personal loans. Here are the five common reasons […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/posts\/8421"}],"collection":[{"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/comments?post=8421"}],"version-history":[{"count":1,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/posts\/8421\/revisions"}],"predecessor-version":[{"id":8826,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/posts\/8421\/revisions\/8826"}],"wp:attachment":[{"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/media?parent=8421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/categories?post=8421"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbey.com\/wp-json\/wp\/v2\/tags?post=8421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}