The reasons for a personal loan denial can be grouped into six categories, but they differ from one lender to the next because each has its own internal policy for determining creditworthiness and risk rating.
- A bad credit ranking
- Workplace insecurity
- Inadequate earnings
- Working for a delisted private corporation and not meeting the age requirement
- Living in an area with a lot of defaults
- Checking your credit score
Lenders will usually refuse to lend if your credit score falls below a certain point. For a personal loan, banks usually need a credit score of 650 or higher. However, considering recent credit tightening as a result of the pandemic, this could increase by 20-30 points. The bank can reject your application if your score falls below this level. NBFCs, on average, demand a lower credit score than banks.
If you don't have any credit background, the lender won't be able to assess your spending habits. If you approach a lender with no background – no savings or salary accounts or deposits – they can refuse your loan application.
Lenders will not lend if the borrower's income falls below a certain level. This amount is usually set at about 20,000-30,000 per month. If your loan is for a larger amount, the income thresholds will be higher, and if your income does not meet the minimum income threshold, your application will be rejected.
1. A bad credit rating
One of the first things a lender can do after you apply for a personal loan is review your credit score. In India, CIBIL is one of the most well-known companies that provide credit score information to lenders. If your CIBIL score is above 700, you are deemed eligible for a Personal Loan, and it is highly likely that you will be approved.
2. Affordable Housing
One of the conditions for eligibility when applying for a Personal Loan is that you have a steady stream of income from a job, career, or company. If your income is below the minimum or fluctuates, the chances of having a Personal Loan can be reduced.
3. Inaccurate information in the application
It will be difficult to produce the required information about you if your name, address, phone number, and other account details are incorrect. Banks will not authorise your personal loan unless you have all of the requisite details.
4. Instability in the Workplace
When it comes to providing you with a loan, financial stability is extremely important. If you change jobs regularly or do volatile freelance work, your loan application is likely to be denied.
5. An disproportionate number of outstanding loans
Canara Bank personal loan can access your financial profile even though you have taken out loans from third-party lenders, which is why you should only take out loans when absolutely necessary and make sure that you pay your installments on time. Your chances of having a personal loan decrease if you have several outstanding debts with banks and NBFCs.
6. Impossible
Other than income and credit score, age, ethnicity, and even educational qualifications are used to determine eligibility for loans but you must have Personal Loan Eligibility. Because of these factors, banks will be hesitant to approve your loan application.
Conclusion:
You must be at least 21 years old and no older than 60 years old to be eligible for a personal loan application. Your personal loan application will be denied if you do not fit into this age bracket. The bank imposes an age limit to ensure that you will be able to repay the loan without difficulty. A consistent source of income demonstrates to every lender that you will repay your personal loan. To qualify for a personal loan, each bank establishes a minimum monthly or annual income requirement. Banks, likewise, have a minimum monthly salary limit. Your personal loan application will be denied if you do not meet this minimum income condition.
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