Beware of 6 personal loan rejection reasons before submitting an application

loan rejection
Beware of 6 personal loan rejection reasons before submitting an application

With key product features highlighted as quick disbursal, no restriction on end usage of funds and no collateral requirement, personal loans have for long been an ideal source of funds for those requiring money urgently. However, many borrowers are left clueless when their application is rejected by lenders. Those who have submitted an application with ICICI can utilize ICICI personal loan status checker to know whether their application is in process or rejected. 

Although the reason behind rejection can be many, knowing the major grounds on which a borrower’s application may get rejected would help borrowers before deciding for going ahead with ICICI Personal Loan Apply Online:

Poor or no credit history-

Most lenders prefer lending to borrowers with a good credit history showing financial discipline and high repayment capacity. A poor credit history shows that the borrower hasn’t been handling loans or credit cards diligently &, therefore, he/she is more likely to default in future as well. Irregular credit card bill payments and skipping or delaying loan EMIs are some credit actions that get displayed as inconsistent repayment behaviour, which can lead to the creation of a low credit score or harm an existing credit score.

Additionally, new to credit borrowers, implying to individuals who have never taken a loan or credit card, do not have a credit history to reflect credit repayment behaviour. Due to this lack of credit history, some lenders may find it riskier to lend to such borrowers, & therefore, many borrowers may get their personal loan rejected, or they may be charged higher interest rates than others. Even after submitting a personal loan request, keep checking ICICI personal loan status to stay updated with your application’s current status.

Failure to meet eligibility criteria-

All lenders have varying eligibility criteria for different loan and credit card products offered by them. Borrowers have to meet these eligibility criteria in order to be eligible to avail of the loan or credit card. These eligibility criteria usually include minimum income and age, area of residence, credit score, existing EMIs, etc. During the process of ICICI Personal Loan Apply Online, many borrowers’ personal loan application gets rejected in the first stage due to the failure to meet the basic eligibility criteria or if their address falls under the unserviceable area. 

Hence, to avoid such disappointments after submitting your loan application, borrowers must make use of loan eligibility calculators before submitting their credit applications. These are available for free usage at online financial marketplaces’ portals and helps borrowers check their eligibility before they apply for any credit card or loan. Also, make use of the online tool of ICICI personal loan status checker and remain updated regarding your application’s status with ICICI Bank.

Higher EMI to Income ratio-

EMI to Income ratio refers to the proportion of borrower’s income already being paid out as monthly instalments for loan EMIs. Most of the lenders generally prefer lending to borrowers with such a ratio of up to a maximum of 40%-50%, including the current loan application’s EMI. In case your FOIR is beyond 40-50%, the chances are high that your loan may get rejected by the lender. Boost your loan eligibility by trying to prepay an existing loan or opt for long repayment tenure (as it translates to lower EMI amount) when going for ICICI Personal loan Apply Online.

Unstable employment history-

More often than not, numerous lenders tend to hesitate lending to those possessing a history of frequent job switches. Even though borrowers opt for some frequent job changes for better careers & higher income, this is seen as a sign of an unstable career in the eyes of the lenders. Therefore, such borrowers seems less creditworthy for most lenders, especially for unsecured loans and medium to long term loans such as home or car loans, which require longer commitment from the borrower’s side. 

For example, a lender may require a condition of 3 years of continuous employment with the current company to grant a loan to any borrower. Hence, many borrowers who have been frequent job hoppers in the past often end up getting their personal loan applications rejected. Remember to regularly check ICICI personal loan status on the website or app after submitting an application in order to remain up to date regarding the application’s status.

Credit report errors-

Errors in your credit report may hinder your chances of loan approval. Such errors can be of various types, like incorrect reporting of loan EMI and credit card bill payments, already closed accounts still displayed open, etc. Many borrowers get their personal loan applications rejected on the grounds of inaccuracies found in credit reports, which were overlooked by the borrower. Also, such errors may be a sign of fraud or identity theft. To avoid such rejections, it’s advised to check & review your credit report periodically so that you can check such errors & get them rectified timely before they harm your loan approval chances when doing ICICI Personal Loan Apply Online.

Improper documentation-

Another common reason behind personal loan rejection is the absence of adequate documentation. Proper documentation is vital for a loan application’s processing and approval. Not being able to timely submit the required set of documents when applying for the personal loan will certainly lead to its rejection. Before going ahead to submit your personal loan application to any lender, always ensure to be prepared with the required documents. This eases the process, and your chances of loan approval get boosted with the right documentation. Once the application is submitted, keep checking ICICI personal loan status on the website or app in order to remain aware of the application’s status.

Should you take a personal loan for meeting expenses like ongoing covid during a pandemic?

Some lenders have been offering COVID-19 specific personal loans since last year. Offered to select existing customers who require emergency funds to tackle the cash flow disruptions caused by the lockdown, these loans charge lower interest rates than those of regular personal loans.

Apart from COVID-19 specific personal loans, borrowers can also consider availing pre-approved instant personal loans, which are offered by few lenders to their select customers. The pre-approved nature of these loans can lead to instant loan processing and disbursal. Credit cardholders having good repayment history can also consider pre-approved loans against credit cards.  

Summing it up, it is prudent for customers requiring funds to meet financial shortfall should contact their bank as well their existing credit card issuers and various online financial marketplaces to find out the best loan option available to them under the current conditions.  When requiring a loan to avail quick funds, do not forget to assess the possibility of ICICI Personal Loan Apply Online besides comparing offers and criteria of other lenders. Remember to regularly check ICICI personal loan status on the website or app after submitting an application in order to remain up to date regarding the application’s status.