In order to fulfill their varied needs, it would not be wrong to say that not only one, but many people take personal loans from banks. However, it came as a big shock, if bank rejects the loan application due to some reason. Yes, it is not possible all the time to get the personal loan so easily as banks consider many factors before approving your loan application. Moreover, many lenders or banks are getting more cautious towards approving the personal loan application, and this process varies from bank to bank. But, below are the some common factors that lead to a rejection of your personal loan application.
One of the biggest reasons for personal loan rejection is having a bad or nil credit history. Yes, a bad credit history leads to bad credit score which in turn creates a big problem for you. Banks consider your profile on higher risk because you showed a tendency to default in the past. Thus, your personal loan application will be rejected by banks or lenders.
Before providing you personal loan, banks consider your income just to know your ability to repay the loan amount. If your personal loan EMI is greater than a certain percent of your monthly income, your loan application will be rejected. In such cases, you can apply for a low loan amount, and can also add the co-borrower to increase your eligibility for availing the loan.
Before approving your personal loan application, banks or lenders verify your details or documentation. In case, you have given any incorrect detail or submitted any wrong document, the bank will surely reject your loan application immediately, thus affect your CIBIL score in future.
If the company or organization you are working with comes under the de-listed category of that bank, most likely your loan application will be rejected. It is important that company for whom you are working should fulfills the listed criteria of that bank, then only your application will be approved, else it will get rejected.
Stability is also another factor that plays a pivotal role for your personal loan application rejection. Many banks or lenders consider the stability in your job as well as residence. If you change your job very often, say in every 6 months, banks will not consider you good enough for personal loan. However, the same applies for your residence as well.
It is important to keep yourself aware with these factors so as to avoid the personal loan rejection. Try not to do these mistakes/errors in order to make yourself eligible for personal loan. However, different banks have different criteria for loan rejection, so read the terms and conditions thoroughly, before you apply in bank for personal loan.