A rejected personal loan stings — and each rejection can dent your credit score. Here are the eight most common reasons, and how to fix them.
1. Low credit score
Below ~700 and many lenders decline. Fix: improve it with on-time payments and lower card usage — see our guide on reaching a 750+ CIBIL score.
2. High existing EMIs (FOIR)
If your EMIs already eat too much of your income, lenders worry about repayment. Fix: close small loans first, or borrow a smaller amount. Check your eligibility.
3. Unstable income or job
Frequent job changes or irregular income raise risk. Fix: apply after you've been in a job for 6–12 months.
4. Too many recent applications
Each application is a hard inquiry; several in a short span looks desperate. Fix: compare eligibility with a soft check first, then apply once.
5. Errors in your credit report
A wrongly-reported default can sink an application. Fix: pull your report and dispute errors.
6. Income below the lender's minimum
Each lender has a floor. Fix: target a lender whose criteria you meet — compare options like Axis Bank or Bajaj Finserv.
7. Incomplete or mismatched documents
Name/address mismatches cause rejections. Fix: keep KYC consistent across PAN, Aadhaar and bank records.
8. No credit history (new-to-credit)
No history means no track record. Fix: build one with a secured card or a small loan, then re-apply.
FAQs
Does a rejected loan hurt my credit score? The hard inquiry can lower it slightly. Several rejections in a row hurt more.
How long should I wait after a rejection? Wait a few months, fix the underlying reason, then re-apply — ideally to a lender you're eligible for.
General information, not financial advice.
