A personal loan might prove to be of great help in time of a financial crisis. Unfortunately, loan applications can get rejected for several reasons. Multiple rejected applications can reflect in your credit score as well making you less credible as a borrower.
Many financial institutions offer hassle-free personal loans. However, due to their unsecured nature, an application goes through strict scrutiny before getting approved. The chances of a lender accepting your application reduce drastically if any one of the below-mentioned points is present.
- Poor credit rating.
- Insufficient income.
- Poor job security.
- A number of applications in a pre-set time.
- The absence of necessary documents.
Let’s take a brief look at each of these factors and discuss a few more reasons why your personal loan may face rejection.
1) In case you have a poor credit rating
The Credit Information Bureau of India Ltd. (CIBIL) generates a credit rating for every borrower in this country. You will be given a score depending on how responsibly you handle your finance. A good CIBIL history report increases the chances of the financial institution granting your loan application.
On the other hand, a bad credit rating decreases your chances of getting a loan. It might include one of the principle reasons why your application got rejected.
2) If you have insufficient income
Another deciding factor for loan applications is a steady monthly income. Almost every lending organization has a pre-set monthly salary cap that you have to meet to apply for the loan.
3) If you do not have a stable job
Most NBFCs and other financial companies expect an applicant to have at least a few years of employment in one particular company. This shows that they are sincere and reliable for granting a personal loan.
4) The number of applications you submitted in a set duration
Applying to too many financial companies within a set time can be one of the critical personal loan rejection reasons. Lenders will think that of you as unreliable and credit hungry, and hence, reject your application.
5) The absence of crucial documents
Your loan application may face rejection immediately if you do not have any of the crucial documents. Follow the guideline provided by the lender and maintain a checklist to make sure you are not missing anything.
Many NBFCs offers approval even with minimum personal loan eligibility and documents. You can apply to such a lender if you do not want the hassle of submitting a lot of paperwork.
There are a few other criteria you should maintain when applying for a personal loan.
6) Minimum and maximum age bar
Personal loans are unsecured. That’s why a lending institution sets a minimum and maximum age bar for loan applicants.
Additional Reading: How to Avoid Personal Loan Rejection?
Most companies ask for a minimum of 25 and a maximum of 60 years of age. However, certain lenders might have their own range that the borrower must fall in.
7) Area of residence
You won’t be able to apply for a loan from a financial company if your residence falls out of their serviceable areas. Thankfully, there are plenty of lending institutions that offer quick and hassle-free personal loans.
You can avail one from NBFCs. They also offer you pre-approved offers for home loans, business loans, personal loans, and a lot of other financial products and services. It simplifies the entire process of availing financing while saving you a lot of time.