Personal Loan Rejected? Here’s Probably Why

While it is very easy to get a Personal Loan today due to the minimal documentation and flexible eligibility criteria that comes along with it, it is also quite possible that your Personal Loan application might get rejected for several reasons. However, that is no reason to panic. Banks and other financial institutions have enough reason to be cautious and sometimes even reject your Personal Loan application. This is because it is typically an unsecured loan, which means that there is no collateral or security involved. This automatically makes it a risky prospect.

So, if your application for a Personal Loan was turned down lately, don’t worry. There are a number of reasons why this might have happened. First of all, a significant reason might have been poor credit history. Banks and other financial institutions always check your eligibility for a Personal Loan in terms of your payment history, financial standing, creditworthiness, and also the regularity (or irregularity) of your payments. All these factors (encapsulated in your Credit Score) determine whether you’re a high-risk or low-risk applicant. If your credit score is low, there are more chances of your loan application getting rejected.

Then there’s also your job. Yes, you heard right. Banks look at whether you have a stable job as a sign of whether you would be able to pay your Personal Loan EMIs on time. So, if you’ve been in and out of too many jobs in the last few years, it may not exactly bode well for your loan application. I mean, the only way you would be able to pay off your loan is if you have an assured salary at the end of the month. If that isn’t there, then why would any bank consider your application? Similarly, your loan application is liable to be rejected even if you have a job but have limited or inadequate income. It’s very simple. If your monthly salary isn’t enough for you to honor your EMIs on time, then it’s almost obvious that you won’t get a Personal Loan.

This leads us to another factor. At the time of applying for an Instant Personal Loan, banks also check how many loans you are currently paying off already. If you have already a number of loans that you are already paying off, then banks will obviously doubt your capacity to repay your new loan. More often than not, your application might get rejected in this case. In the same vein, if you have already made too many applications for a loan, which have been rejected, this also lowers your chances of getting a new loan. This is because every time a customer makes an inquiry for a loan, his application (and its subsequent approval or rejection) gets recorded as an inquiry in your credit report. Ultimately, too many inquiries make you look like you are desperate for money. This might definitely bring down your chances for availing a Personal Loan.

In conclusion, just remember that just because Personal Loans are relatively easier to get, there is no guarantee that you’ll still get one. Your application’s approval depends on all the factors listed above. So, borrow only when in absolute need of funds, so that you maintain a good credit score.