Introduction
Applying for a personal loan can be an excellent way to cover expenses such as medical emergencies, education, or home renovations. However, not every application gets approved. Many borrowers face rejection due to avoidable mistakes or lack of preparation.
In this blog, Vizzve Finance explains the top reasons why personal loans get rejected and what you can do to ensure your application stands out for approval.
1. Low Credit Score
Your credit score is the first factor lenders check. A score below 650 often leads to immediate rejection as it signals potential repayment risk.
How to Avoid:
Regularly check your credit report.
Pay credit card bills and EMIs on time.
Maintain a credit utilization ratio below 30%.
2. Unstable Employment History
Lenders prefer applicants with a stable job and consistent income. Frequent job changes or gaps in employment can hurt your chances.
How to Avoid:
Maintain at least 6–12 months in your current job before applying.
Provide additional proof of income if self-employed.
3. High Debt-to-Income Ratio
If your monthly debts consume most of your income, lenders may doubt your repayment ability.
How to Avoid:
Pay off small debts before applying.
Avoid taking multiple loans simultaneously.
4. Incomplete or Incorrect Documentation
Missing or incorrect documents are a common cause of rejection.
How to Avoid:
Double-check your ID proof, income statements, and bank records.
Use Aadhar and PAN details for faster verification.
5. Applying for a Loan Amount Beyond Eligibility
Requesting a higher loan amount than your eligibility can result in rejection.
How to Avoid:
Use online eligibility calculators provided by lenders.
Apply for a realistic amount based on your income.
6. Multiple Loan Applications in a Short Period
Each loan application creates a hard inquiry on your credit report, which can lower your score.
How to Avoid:
Space out loan applications.
Compare offers before applying rather than applying everywhere.
Expert Tip from Vizzve Finance
Vizzve Finance recommends improving your financial profile before applying and seeking pre-approval offers to increase your chances of quick approval.
Frequently Asked Questions (FAQs)
Q1: How can I improve my chances of getting a personal loan approved?
A: Maintain a high credit score, ensure stable income, and apply for a realistic loan amount.
Q2: Will a rejected loan application affect my credit score?
A: Yes, multiple rejections can lower your score due to repeated hard inquiries.
Q3: What is the ideal credit score for personal loan approval?
A: Most lenders prefer a score of 700 or above for quick approvals.
Q4: Can I reapply after my loan is rejected?
A: Yes, but only after addressing the reasons for rejection and improving your eligibility.
Q5: Does Vizzve Finance provide loan application assistance?
A: Yes, Vizzve Finance offers personalized guidance to improve your application and secure approval faster.
Published on : 12th August
Published by : Selvi
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