Top 5 Personal Loan Rejection Reasons

Is your application for a Personal Loan Rejected? Here are a few of the possible reasons.

1. Incomplete Documentation

Rejection Reason: Incomplete or incorrect documentation

What to do: Provide all the documents asked by the lender to meet the eligibility criteria and also ensure the information provided is accurate and consistent

2. Low Credit Score

Rejection Reason: Credit score lower than 750

What to do: Before applying for an instant personal loan, ensure that your CIBIL score is at least 750. A higher score increases the likelihood of approval and could also help you get a lower personal loan interest rate.

3. High Debt to Income Ratio

Rejection Reason: The sum of the resulting EMI and your existing EMIs is more than 50%-60% of your monthly income

What to do: Repaying your existing loans improves your repayment capacity. Use the personal loan EMI calculator to calculate the resulting EMI and eligibility calculators to get an estimate of the maximum amount you may be able to get.

4. Multiple Loan Applications

Rejection Reason: Each loan application leads to a hard enquiry on your credit history. Too many such enquiries from multiple lenders implies credit hungry behavior and could lead to rejection

What to do: Do not apply with too many lenders. Do your research thoroughly and apply only with those lenders whose personal loan requirement criteria matches your profile.

5. Job or Income Instability

Rejection Reason: Insufficient work experience at the current job, or an unstable income increases the chances of rejection.

What to do: Check the lender’s criteria regarding work experience (for salaried) and income. If needed, add a co-applicant with a good income and credit score to boost your eligibility.

*All loan approvals are subject to the applicant’s eligibility as well as Fullerton India’s policies at the time of application.