The personal loan is a multi-purpose loan which can be used to fulfill your requirements like bill payments, home renovation, EMI payment, medical emergency, personal can be for anything.
A personal loan is an unsecured loan where the risk involved for the bank is more, so the approval rate is quite less. Processing time has decreased over the years. All this is possible because of technology, you can apply by visiting their branch or online. Applying online have made this process easier and shorter. Here lenders play an important role to help you to approve your role.
There can be several reasons why your personal loan application got rejected. Some may be known and some are unknown to you. Sometimes you don’t fulfill the bank eligibility criteria. There are some reasons for which your application got rejected:
1. Poor credit history/error
Your credit score has a huge impact on whether your application will be accepted or not. If your score is close to 900 then there is assured of getting approval. This credit score depends on your repayment history. Bank will assure that will you be able to repay the loan amount or not so they make an assessment of your risk of default. Every credit score has some amount of default risk.
If you find any error in your credit file resolve it before it takes your credit score down.
2. Multiple loan application and inquiries
If you are applying for a loan very frequently it will be tracked by the credit bureau. Every time you apply for loan bank check for your credit score and previous records. If you look like a credit hungry person who later won’t be able to pay back then your application may get rejected by the bank.
Making multiple requests for a loan may impact your credit score. You should do your research before applying for a loan from different lenders. After choosing the best option to apply for it.
3. Annual income criteria
Your annual income depends more than your documents to get approval for a personal loan. Different lenders define their minimum income requirements for the personal loan. Or else you can look for NBFC for your loan. Otherwise, you should talk about it to your lender before applying for a personal loan.
Lenders will recheck the documents you have provided to them, so better you verify all the documents before submitting the documents. If the lender finds any error in your information, they will strictly reject your application.
5. Unstable employment
Most of the banks verify your employment background if you have a stable background or not. If you keep changing your job and doesn’t have stable employment then your loan application may get rejected. By lenders, this is not considered as a serious one.
6. Too much debt
If you already have other loans and paying the debt for those banks may reject your application for personal loan considering that you won’t pay more debt if an emergency arises.