You are in need of money urgently to meet your personal needs or to meet a monetary shortfall. So, you applied for Personal Loan and you were hoping for a positive response from the bank. But you have been refused a loan! You didn’t expect that rejection.

Your Personal Loan rejection reasons may be one, few or all of the following:

1. Insufficient income: As there is no security involved, lenders will consider your repayment capacity. If you don’t have a stable income and if it is low, you will be refused loans everywhere.

2. If you are over-leveraged: If you have taken other loans and your income is insufficient to repay more than one loan, you could be denied a loan.

3. Not having a stable job and persistent job: Hopping from one job to another may discourage the lender from offering you a loan.

4. If you have applied for a loan several times in the past: Doing this may affect your current application. Numerous loan inquiries create a bad credit score.

5. If you have not given a valid purpose of availing finance, your loan request may be declined.

6. If your income is good and you have taken other loans, but have defaulted on payments, you may face rejection. Other factors for a bad credit score include skipping EMIs, paying EMIs late, late payment of credit card bills, etc.

7. If you have taken too much loan during the last 12 months, your application may be rejected even if you have an excellent credit score.

8. Previous loan rejections also reflect on your credit history. This may affect your current application.

9. Do you have an excellent credit score, but refused a loan? This may result due to the furnishing of wrong information. Before providing finance, lenders do verify all the information you provide.

10. If you have a record of frequently changing your permanent address, your application may get rejected.

11. If you have been a loan guarantor to a repayment defaulter, it will have a negative impact on your credit score. In such a situation even if you have an excellent credit score, you will still be refused a loan.

Besides the aforementioned Personal Loan rejection reasons, there may be other factors that may result in rejection of an application.

To ensure that you are not refused loans everywhere, consider the following:

1. Check your eligibility criteria before you apply so that you won’t be refused a loan.
2. Submit a statement of your savings and investments.
3. Do not submit any false documents.
4. Never default on repayments if you have already taken other loans.
5. Pay your credit card bills and other payments on time.
6. Do not avoid verification calls from your bank where you have apply for a Personal Loan.
7. Ensure that your residential address doesn’t match with that of a defaulter.
8. Avoid being a loan guarantor. If you have to, read this first: Stop! Read This Before Signing Up as a Home Loan Guarantor 
9. Do not unnecessarily apply for loans several times.
10. Apply for a loan only if you have a good credit score.
11. Before applying, ensure that you have a stable source of income.

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