Reasons why your personal loan application may get rejected

 Personal loans are an excellent borrowing option when you need money fast and have no restrictions on how you use it. They also don't demand any collateral. However, you can only get a personal loan if you match the bank's eligibility requirements. A bank can turn down your loan application for a variety of reasons. The following are the most common ones to be aware of:



Poor or no credit history: Most lenders prefer to lend to borrowers who have a solid credit score and have paid all of their loan EMIs and credit card obligations on time. A low credit score indicates that the borrower has not been careful in managing loans or credit cards, and hence is more likely to default in the future. Late bill payments and EMI skips are two examples of acts that might result in an unfavourable credit history and, as a result, a low credit score.

Furthermore, those borrowers who have not yet taken out any type of credit, such as loans or credit cards, have no credit history. Because of this lack of credit history, most lenders consider lending to such borrowers to be more riskier, and as a result, many borrowers may have their personal loans denied or be charged higher interest rates than others.

Failure to meet eligibility criteria: Each lender has its own set of eligibility requirements for the various loan products they offer. These usually include things like minimum income, age, and where you live. Many personal loan applications are turned down at the initial stage because they do not match the fundamental eligibility requirements. Borrowers should use loan eligibility calculators before completing their credit applications to avoid such disappointments after submitting their loan applications. These are available online for free and assist borrowers in determining their eligibility before applying for a loan or credit card.

Higher FOIR (Fixed Income to Obligation Ratio): FOIR (Fixed Income to Obligation Ratio) refers to the percentage of a borrower's income that has already been paid out as monthly instalments for fixed monthly obligations such as EMIs. Most lenders prefer to lend to borrowers who have a FOIR of up to 40-50 percent, including the obligations of the present loan application. If your FOIR is greater than 40-50 percent, you're likely to be rejected.

Unstable work history: Many lenders are hesitant to lend to borrowers who have a history of job hopping. Despite the fact that borrowers choose frequent job changes in order to advance their professions and earn more money, lenders view this as an indication of an unstable career. As a result, such borrowers appear to be less creditworthy, particularly when it comes to unsecured loans. For example, a lender may impose a three-year continuous employment requirement before granting a loan to any applicant.

Credit report errors: Errors in your credit record can make it difficult to get a personal loan. These issues can include inaccurate payment reporting, closed accounts being shown as open, and so on. Mistakes in personal information, such as the erroneous address or PAN, can result in a loan refusal. To avoid this, it's a good idea to check and examine your credit report on a regular basis so you may catch inaccuracies early and fix them before they hurt your loan approval chances.

Inadequate documentation: Proper documentation is essential for your loan to be approved. Failure to present the correct documentation when applying for a loan will almost certainly result in your loan being denied. Personal loans require documentation such as a valid identity evidence, proof of address, income slips, bank statements, and so on. Before you submit your application to the lender of your choice, double-check that you have all of the essential documentation.

If any issue then contacts me at Personal Loan Online Apply


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