8 reasons why your loan application is getting rejected 

8 reasons why your loan application is getting rejected


Before applying for a loan, it is always advisable to know the possible reasons why it could get rejected. Below are 8 reasons that you should consider eliminating to maximise the chances of loan approval. 

1) Poor credit score   

One of the biggest reasons for rejection of loan application is a poor credit score.  Delayed payments and high credit utilization are key reasons which can impact your credit score, thereby decreasing the chances of lenders approving your loan application.   

2) Unstable monthly income  

Monthly income is one of the key determiners of the status of any loan application.  

If you have an unstable monthly income, chances are the lender would assess if you’ll be able to repay your EMIs on time.   

3) Submitting too many loan-applications  

Since the lender views your entire credit history, they get the information about all your loan applications.   

Submitting multiple loan applications gives a notion that you’re either being consistently rejected, or you are trying to get loans at the same time from multiple lenders. 

4) Having too many ongoing debts  

Ongoing debts are a sign for the lender that you are already over leveraged, hence they increase the chances of rejection of your application.  

5) Failure to meet the eligibility criteria  

Different lending companies have different kinds of eligibility. Some lenders require the applicant to have a minimum monthly income of Rs 25,000 or certain credit scores and so on. 

Your loan application might be rejected simply because you don’t fit the exact eligibility criteria.  To avoid such situations, you should always research before applying for a loan.  

 6) Mistakes in the credit report  

If your credit bureau has made a mistake in your report, your future loan applications could be rejected due to that.  

It is best to look out for even minute details in your report and look for errors which may include incorrect loans reported. Upon the discovery of the error, contact your bureau and get it rectified.  

 7) High credit utilization 

Credit utilization is the amount of money you are using from your active credit line or loan. High utilization of credit may negatively impact your credit scores.  

If you have a very high credit utilization across all your borrowed money, there is a high possibility that your application will get rejected.  

8) Geographical Ineligibility 

Many instant loan companies categorize some geographical regions under non serviceable areas or in a negative zone. 

If your loan application gets rejected and you don’t see any issue with your past credit behaviour, you may check with the lender to see if this could be an issue. .  

Additional Tip:   

You could always contact Customer Support to understand why your application got rejected. This could help you find out the exact reason in case you are not able to find out by yourself.


Personal loan rejections can happen due to many factors. You can always reapply for your loan and try again but before you do that it is important to be aware of the possible reasons. Work on it as soon as possible once you find out the reason. 

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