Denial is hard to accept when you are unable to fulfill your desires. The same is true when you are looking for resources to fulfil your need and desire. Personal loans have proved to be a great saviour when it comes to meeting our financial requirements. But what if you are denied for a personal loan? Well there are several reasons apart from the eligibility criteria which can be responsible for your personal loan rejection.
Here is a list of other reasons that lead to the denial of the personal loan. Let us look at them one by one:
Comments in the cibil score
Well, your CIBIL score might be right but the comments can still have some serious consequences on your eligibility for a loan. The CIBIL report is a direct reflection of your credibility. So, if there are words mentioned in the report such as ‘settled’ or ‘written off’ or words such as ‘day after debt’. These things may lower the probability of your loan from the bank. For instance, if your CIBIL score has a score of 780 but in your CIBIL report, the word settled is there. So, the chances are low then of loan approval.
Guarantor as a defaulter
A guarantor is a person who assures to pay the loan on behalf of the primary borrower if he/she fails to make the payment of the loan. And if you are a guarantor for any of your friends/family and the person has got a name in the defaulter list then the probability of your eligibility for your personal loan becomes low.
Being Overleveraged
This situation comes into picture when you have too many loans on your head. During the background check process, the bank undergoes your background and sees the amount of debt you have on your head. If you have a lot of loans then the probability of your getting a new loan is less. This is because you have a high debt to income ratio.
For instance, if you are earning ₹70,000 have 2 loans on your head and you are applying for a personal loan to get some funds for another need. The chances of your denial are high as you might already be paying a huge amount of your income on the EMI of both of the loans. The third loan will only increase the amount of the EMI towards your income which can affect your survival.
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Improper tax history
CIBIL score is not the only thing to be taken into consideration while applying for a personal loan from the bank. If you have a careless record of paying the income tax then you should know the fact that you are not eligible for any type of loan from the bank. This is due to the reason that banks take into consideration a decent income tax-paying record of at least 2 years down the line for an eligible loan applicant before even looking into the CIBIL score part.
Defaulter detail matching
Yes! This can happen to you as well. The bank keeps a record of the defaulter applicants along with their addresses and other proofs such as working company and several others. While this may sound weird but if you have recently moved into a place that belonged to a defaulter earlier then the probability of your loan diminishes. This is due to the matching of your home address to the address of the defaulter in the bank’s list. Also, if you are working in a company where there have been lots of defaulters or your boss is in the defaulter list then the chances of your loan approval are low. Previous incidents have come into the picture like these where applicants are being rejected in the background check processes.
Well, this makes it short and clear that if you have any of these situations then the god’s glory may not be you today. You might be one of the persons who will walk out of the bank without any funding in hand.
These are the reasons which can lead to your personal loan application rejection even when there is not your fault! To avoid such rejection what you can do is- ask your lender the reason for rejection and if you get any of the above factors in response, try to talk to your lender and convince them by giving them proof.