Think about a situation that you have decided to go on vacation and are thinking to apply for a personal loan. But, what shocked you when you applied for the loan is that your application is rejected. In such a case, you will just remain thinking that what has caused your application to get rejected. Well, let us tell you that there are number of factors that can lead to the denial of your personal loan application. As there are number of lenders who offer personal loans, the criteria for approval varies with every lender. However, here we are mentioning some common reasons that can become hindrance in the way of your personal loan.
Low income: Income is the foremost factor that will affect the approval of your loan. It lets the lenders access that whether you will be able to repay to loan or not. If EMI of the loan is greater than certain percentage of your income, then your loan application is likely to get rejected. In such a case, you can consider applying for the lower amount or adding a co-borrower as it will increase the chances of loan approval.
Credit score: Bad credit history can put a stop to the application of your personal loan. Actually, credit score lets the lenders know that how good you are in managing your money and expenses. Bad credit score will let the lender think that you will not be able to repay the money on time and thus, it will increase the chances of your rejection. So, having a good credit history is really essential to get your loan application approved.
Stability: One of the main factors that lenders consider while approving your loan application is the stability in your job and residence. More stable you are more will be the chances of approval. And in the case you are working at current location for less than six months, your loan application is likely to get rejected. Same is the thing with the residential stability. As both these things can increase you expenses, the lenders think that you will not be able to repay the loan.
Discrepancy in details: It is not that you will give the details and the lender will approve them. Before moving further with the process, your details will get verified. And in the case, any discrepancy is found in the information; your application will be rejected immediately.