20 Nov 12 Reasons Why Your Loan Gets Rejected with Good CIBIL Score
Applied for a loan, but your loan got rejected? Well! Many reasons can cause your application for a loan to be left despite having a good CIBIL score. Applying for a loan involves a lot of documents, decision-making research that needs pre-preparation.
Being prepared not only saves time but also effort. You may be unaware of all the formalities and paperwork required for applying for a loan. It’s important to be loan-ready and it’s also important to know what all reasons can cause your loan to be rejected. This article will explain all the possible criteria that can hinder you to acquire your loan amount.
Reasons why your loan is rejected despite having a good CIBIL score
Below are reasons that explain various other factors for your loan rejection despite an excellent CIBIL score. Make sure you go through them carefully and solve your issues proactively to avoid getting rejected.
1. Recurrent credit borrowing
Having a habit of borrowing frequently may get a bad impression on your credit behavior. The lenders (banks, financial institutions) may be doubtful of your repayment capacity. Even if you make repayments of multiple loans EMIs timely, the lenders may doubt your credit dependence and thus consider you a risky applicant. Furthermore, they will be reluctant to offer you a loan amount as they may think you may be overburdened with a new credit amount, making you miss or slow your credit repayment.
2. Remarks mentioned in your CIBIL report
Another factor for a rejected loan application by the lender is the remarks mentioned in the CIBIL report. The comments in the report like
- Paying EMI after due dates
- Requesting a lower rate of interest
Any other kind of comment stated depicts the casual behavior of the applicant or poor repayment habits of the applicant. Thus, it is strictly advised not to overlook the words in a CIBIL report. Lenders will mandatorily pull out the information or the applicant’s credit report before offering a loan or credit. Make sure you dissolve these comments either by negotiating with the creditors or asking for a goodwill deletion or by paying your debt in full.
3. Unstable career or salary
Any instability in your salary or job can give a wrong impression about you and your organization. Apart from that, if you are changing your work, address, or position frequently, this can also negatively affect your credit score and may hamper your loan approval process. Any form of instability in the flow of income due to an unstable career can make your lender and financial institution more cautious of your loan application.
- Details Matching Defaulter’s
In case any of the information required for loan approval like name, address, PAN details, age, or even gender matches with the details of the defaulter, there are high chances that your loan may get rejected even after having a good CIBIL score.
5. Tax Payment History
Not paying your taxes on time is another primary reason that may cause the rejection of your loan. Failing to pay the income tax returns timely for the last couple of years can put you at risk for loan rejection.
6. History of loan rejection
Credit score report shows all your previous and current history of rejected/approved loan applications made in the past. Whenever you request a new loan, the lenders pull out all your credit information done in the past to evaluate your credit details. If, in case, the lenders find out that your history represents frequent loan rejections, there are chances that your loan application may get rejected. Hence, it’s necessary that you settle all your previous loan debts before applying for a new one.
7. Poor CIBIL Record of Co-Applicant
The details of a co-applicant while borrowing a loan will also be taken into account if you are applying for a joint loan. In case the CIBIL score of the co-applicant is found to be poor or has a history of unstable income or any mistake in the address, then you must settle; the chances are high that your loan application might get rejected. Thus, it is advised that you also check your co-applicant CIBIL status before applying for a loan.
8. Unstable secure & unsecured loans
To obtain a fair credit score, it’s essential to maintain a balance between unsecured and secured loans. Any unstable balance between these two may cause lenders to think twice about approving your loan because they may consider you an applicant with credit-based debt.
9. Enquiring multiple times
Making soft inquiries related to your credit score do not affect your credit report. On the other hand, if the lender pulls out your credit report to check your credit history is a hard inquiry made by the lenders. If these inquiries are made multiple times, the person must have applied for a loan multiple times, which is not a good practice and may result in a rejected loan application. Thus, it is recommended for a period to avoid loan inquiries before applying for a new loan.
10. Information on your income
Failing to submit complete financial information may land you into loan rejection. Lenders very keenly observe your financial summary to understand your capability of paying back your loan amount. If the lender finds a loophole in the same, the chances of your loan rejection become very high.
11. Inability to verify details
Banks and financial institutions maintain the details of the defaulters like name, age, address, employment, loan history, and other things. If the lender finds any discrepancies with the facts you have provided, your loan application will likely be denied after undergoing a document verification.
12. Age of the applicant
Another reason that your loan might get rejected is your age. Applying for a loan closer to the retirement period (more than 60 years) and less than 21 years can cause loan rejection. Lenders and financial institutions may feel reluctant to offer loans to such applicants due to zero chances of loan repayment ability. That’s why check your age criteria and loan tenure, and the amount before applying for a loan. Especially in the cases where you are closer to your retirement period.
The reasons for personal loan rejection vary from bank to bank, as every bank has its eligibility criteria for loan approval. So, it is better to check the requirements with your bank before applying for a new loan.