How to Avoid Rejection of Your Personal Loan: Dos and Dont’s

Personal loans are taken to cater to the immediate needs of an individual, as financial emergencies may occur without any prior warning. These loans can be availed from a bank or other financial institutions. Personal loans are unsecured loans and stand a chance of getting rejected from the lender due to several reasons. An individual’s credit score plays a vital factor if you are looking to apply for the best personal loans online. The higher is a person’s credit score, the more are the chances of a loan being approved.

If you are planning to avail a personal loan apply only if you are prepared for it. Here are a few Dos and Dont’s that you should follow in order to reduce the chances of reduction.


  • Maintain a healthy Credit Score: Banks and financial institutions have eligibility criteria for giving loans. These sets of criteria need to be fulfilled to avoid any rejections while applying for a loan. Personal loan, unlike most other forms of loan, is unplanned which makes the lender question your credibility and ability to return the borrowed sum. Therefore, maintaining a credit score of 750 and above always gives a benefit when it comes to availing a loan. A credit score helps banks to review an individual’s promptness when it comes to repayment as there are no collaterals and your soul credibility banks upon the credit score
  • Keep a stable income: An individual’s income also plays a vital role in a loan application. Banks look at a person’s income to check if they will be able to repay the borrowed amount. A higher-income proves to be in favor of the applicant. That is why a salary slip or an income certificate comes handy during loan application. It should be kept in mind that before applying for a loan, the earning of the borrower plays an important role in sanctioning of a loan
  • Lower Credit Utilisation: Financial institutions and banks consider a lower utilization of credit as a sign of possible repayment. Maintaining a credit utilization of lower than 30% ensures timely repayment of dues and safeguards you from being rejected for your loan application
  • Timely repayment of earlier dues: Lenders keep an eye on earlier dues of an applicant and it is highly recommended that a loan seeker makes sure that the earlier dues are cleared. EMIs that are taken in the past must be paid by the due time so that the application is considered and the loan amount is approved


  • Do not furnish incorrect details: Your loan may stand a chance of rejection if the details in the credit score or loan application seem incorrect. Loan seekers must make sure that the key details of every document like the PAN card and previous loans and bank account are accurate. It is therefore advisable to have all the details of your credit report, thoroughly checked and the errors rectified, as these errors will lower the credit score
  • Avoid multiple loan applications: If you apply for loans from multiple sources, it is not taken well by the lenders as it shows your immense financial instability. It portrays your constant need for credit and highlights the burden it will be on your income. Therefore, it is advisable to not apply for multiple loans at the same time and only take a loan when there is an absolute necessity of it. This will keep the number of your applications in check and you will stand a chance of acquiring a loan at the time of crisis
  • Do not apply if you have multiple pre-existing loans: When you apply for a new loan, the market reviews your present loan profile. Multiple loans prove to be unfavorable for the acceptance of your present application. A loan is repaid through EMIs and when banks check that your income may not stand that burden, they tend to turn down your loan application. Therefore, it is always advisable to not take too many loans if you lack the income resource for their repayment
  • Don’t switch jobs frequently: An applicant with a history of the constant change of jobs and irregularity in the pattern of employment is often rejected and is not considered eligible for loans. This shows their inability to repay timely EMI’s. Lenders often look for a person with a longer time duration when it comes to giving loan and therefore a frequent job switch is not favorable for the applicant

It should also be kept in mind that there are certain recruiters that are blacklisted for their inadequacy and poor consumer behavior, being an employee of such companies might also amount to the rejection of your loan application.

It is advisable to consider the aforementioned Dos and Don’ts before opting for a personal loan apply with any bank or any financial institution. If you have had a history of on-time loan repayment, you will stand a strong chance of approval. Making sure you pay your EMIs on time will also guarantee clearance in future loan applications.

Leave a Reply