6 common reasons for the rejection of a Personal Loan
When it comes to sudden financial emergencies, relying only on your savings may not suffice every time and you might need a Personal Loan to tide over the situation. In such a scenario, the last thing you would want is rejection of your loan application. Make sure that none of the following 6 reasons becomes a cause for rejection of your loan application.
1. Low credit score
A credit score refers to a number between 300 and 900 that reflects how creditworthy you are. Usually, a lender has a particular credit score threshold to sanction a Personal Loan. Your Personal Loan application will be accepted only when your credit score is above the Bank’s acceptable threshold. If you do not have any credit history, your application might also get rejected. Try to maintain a credit score of 750 and above by paying all your bills and loan instalments on time.
2. Multiple loan applications and enquiries
You can apply for a Personal Loan from multiple lenders but there is a catch. Your bank will inquire about your credit report before giving you the loan. When the report from the Credit Bureau shows that you have applied for loans to multiple lenders, it will just make you appear distressed, question your financial credibility and may lead to your application getting rejected. So it’s wise to apply and enquire for a Personal Loan only from one lender at a time.
3. High amount of existing debts
Online approval of your Personal Loan might be stalled if you already have a high amount of debt. If you presently have multiple open credit accounts such as loans and Credit Cards the prospective lender will think you are burdened with credit. As a result, you will seem like a risky proposition, which can be a ground for your loan being rejected. Thus, you should only take loans as per your repayment capacity and never go overboard.
4. Not meeting the income criteria
The lender will want to ensure repayment before they disburse a Personal Loan. They go through the applicant’s income as a part of their eligibility for a Personal Loan. A stable income is a sign that you have the capacity to repay the EMIs on time. Therefore, if there is a chance that your application might get rejected on this ground, talk to the lender before you fill out the application.
5. An unstable employment history
The applicant’s employment history and occupation have a keen role to play in the approval of Personal Loans. Lenders want to provide loans to people who work in known and permanent organisations. Thus, if your company isn’t listed or registered, the application might be rejected. Moreover, a majority of banks provide Personal Loans to those with a stable history of employment and therefore, focus on maintaining a good and reliable employment record. Also, a work experience of at least three years is highly appreciated in this matter.
6. Missing or incorrect documents
A Personal Loan application is approved after verification of documents. When any personal loan document is missing or inconsistent information is found in these documents, your loan application will get rejected. The application form is as important as the other documents that you submit with it. Details in your loan application are used by the Bank to generate the required information about you. If there is any discrepancy in any detail mentioned in the loan application, it may get rejected.
If you have any doubts about your loan application being rejected, contact an ICICI Bank representative now. Also, you can ask them about the eligibility criteria to be sure of all the factors before you start filling out the form.
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