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Factors That Can Bar You From Getting a Personal Loan in India

Submitted by admin on January 16th, 2025

Lenders assess your eligibility based on various criteria before approving your application. Understanding these factors can help you avoid common mistakes and improve your chances of getting that loan. Here are the main factors that could bar you from getting a personal loan:

Poor Credit Score

Credit score also is an important factor in as far as loan approval is concerned. A majority of the banks and other financial institutions demand that applicants’ credit scores should be or above 750. If you have a bad credit score, then this means that you have bad credit history of paying your loans instalments, or any other form of agreement on time or at all, or you have high credit utilization ratio, which makes you a high risk for lenders.

Low Income or Unstable Job

Your ability to pay the loan is usually the focus of any lender by assessing your income. Lenders also factor the applicant’s monthly income when approving loans and if your income is low or unstable, your application will be declined. Banks expect people to make the promised payments and thus insist on enduring income source for about 6 months to a year.

High Debt-to-Income Ratio

DTI is a set of debt that compares the existing debts against your income slab for their repayment. In places that you find yourself already hooked up with so many loans or credit card repayments, which won a considerable chunk of your income, you may consider yourself a high-risk applicant.

Inadequate Documentation

While applying for an personal loan, one needs to produce, identification proof, proof of address, proof of income as well as bank statements. There are cases when a candidate fails to submit the required paperwork or, at least, have updated documents – in this case, the lender will not consider the application.

Unclear Repayment History

If you have previously made late payments or even completely defaulted on earlier loan or credit card payments or utility bills, then you are considered high-risk by these lenders. It means that those credit providers can deny you a credit application because they may not be convinced that you can manage more obligations.

Age and Employment Type

Most banks have age restrictions when it comes to granting personal loans. Generally, applicants should be between 21 and 60 years old. Additionally, if you’re working in a non-permanent or contractual job, some lenders may hesitate to approve your loan due to the perceived risk of job instability.

Frequent Loan Applications

If you have recently applied for multiple loans, your credit score might be affected by frequent credit inquiries. Lenders see multiple applications as a sign of financial distress or instability, which may decrease your chances of getting approved for a personal loan.

Conclusion

Getting a personal loan in India requires you to meet certain eligibility criteria. To improve your chances, maintain a good credit score, ensure you have a stable income, and keep your debt levels in check. Preparing your documentation carefully and addressing any issues in your financial history will go a long way in increasing the likelihood of getting approved for a personal loan.

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