5 Common Reasons for Personal Loan Rejection

Applying for a personal loan is easy. All you need to do is fill in your basic details and submit them online to get same-day or instant approval. However, this fast application process in itself does not guarantee approval. Since your lender verifies your application before approving it, ensure that you fill in the details correctly. Apart from this, knowing what can lead to your loan application being rejected will help you ensure that you don’t make those mistakes.

Additional Read: Personal Loan fees and charges

1. Applying with a low credit score

A low credit score is a reason enough to have your loan application rejected. A credit score can vary from 300 and 900. The higher your score, the better are your chances of getting personal loan approval. A score of 685 or higher and above is the ideal score for you to get a quick sanction. So, to boost your credit score, avoid erratic loan payments, pay off outstanding debts, and don’t overuse your credit card.

2. Submitting incomplete documents

Not submitting the right documents that prove your eligibility for your personal loan can lead to rejection. So, pay attention to the loan application guidelines before you submit your documents. Adhere to the list of documents that you need to submit and keep a checklist handy to ensure that you don’t miss out on any. When you choose an online Personal Loan from Bajaj Finserv, you only must complete basic document submission. Moreover, you can submit your application online, get approval within minutes, and have money in your bank as soon as 24 hours*. Before submitting the required documents it is advisable to use our personal loan EMI calculator and plan your loan repayment journey wisely.

Additional Read: What is repo rate and how does repo rate impact on Personal Loan?

3. Not having a steady source of income

Lenders pay attention to and check your ability to repay. So, if you don’t have a steady job, it is likely that the lender will assume that you don’t have the financial means to service the loan in a timely fashion. So, avoid applying for a loan when you have just switched jobs. In the absence of a job, ensure that you have other sources of income, such as interest payouts or rental income, that will help you make EMI payments regularly. This will help you secure a personal loan easily.

Additional Read: How to get a loan without a job?

4. Not matching other eligibility criteria

Apart from your identity and income, you need to fulfil other eligibility criteria set by the lender, such as being the right age. Besides, you must also be in a city that the lender operates in to get the loan. Since these factors are out of your control, your best bet is to choose a well-known lender that offers pan-India coverage. Armed with the knowledge of what not to do and how to rectify shortcomings in your loan application, you are sure to get a quick sanction.

5. Multiple pending loans

Applying for multiple loans simultaneously or having multiple pending loans ingoing can adversely affect your creditworthiness and are the loan rejection reasons. Lenders assess your credit report, and multiple pending loans may signal financial strain, making you appear riskier to lend to. Each loan application triggers a hard inquiry on your credit report, potentially lowering your credit score. To improve approval chances, carefully consider and prioritise loan applications, addressing existing debts before seeking new financing. Maintaining a healthy credit profile enhances your overall financial credibility.