New Delhi: People often take a personal loan in case of the dire need of money or to fund their expenses. Due to increasing urbanization and instant gratification people opt for a loan. But taking a loan is not that easy. Your loan approval depends upon a lot many factors.
There are times when you apply for a loan and application gets rejected. Apart from the eligibility criteria, there are multiple reasons that are taken into consideration while you apply for the loan. Here are the reasons as to why the bank has denied your loan application.
1. The first thing that banks check while approving the loan application is the credit score. This 3-digit credit score is the most important factor behind your loan application rejection or approval. It ranges between 300 to 900 where the 750 or above score is considered good. This can be checked from Credit Information Bureau Limited (CIBIL). It basically reflects the applicant’s capability to repay the credit.
2. Another important factor which is taken into consideration is the income of the applicant. Therefore, one should consult with the lender while filing the loan application form. Most of the lenders have defined minimum income threshold.
3. If your loan application has been rejected in the past then this information is also accessed by the new lender. Even if you have a good credit score, this factor outweighs the loan application rejection.
4. While approving the loan application lender verifies the information provided by you. If you have any incorrect information, the bank will outrightly reject your application.
5. Your loan application can be rejected if you have an unstable employment history. It reflects the borrower’s instability and incapability to repay the loan. Such applicants are considered as less worthy by the lenders.
6. It is important to note that a loan default impacts the borrower’s and the guarantor’s credit history. If you are becoming a guarantor to anyone’s loan, make sure that he or she is capable enough to repay the loan.
7. If you are applying for a joint loan, then the credit score of both applicant and co-applicant is checked. Even if you have a healthy credit score but your co-applicant has a poor record then chances are that bank will reject your loan application.
8. If you are working with such a company where your salary is not credited on time then it might also affect the possibility of loan application approval.