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  • Reasons for Loan Rejection Otherthan Cibil

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    CIBIL Score = 750+; Loan application = Rejected; Here’s why!

    CIBIL scores basically tell banks whether or not you’re likely to default on loan payments, based on your history with other banks in terms of loans, credit cards, EMI payments, etc. A score above 700 is considered acceptable, and anything above 750 has a safe chance of working in your favour (considering a range of 300-900).

    You plan and meticulously detail and define the amount you need to take out a loan for whatever purpose. You decide that all the finances you need are a simple loan approval away and you confidently march your loan application and highly respectable CIBIL score to the bank and submit them for consideration.

    Most banks take around 72 hours to approve loan requests and in this time you reflect on how you’ve done everything required to keep your CIBIL score high enough – working hard to make your payments on time, paying the amount promised and play it straight with your bank – never asking for extensions, reductions or settlements. You use your credit card in moderation and make your payments before they’re due. All this to get your CIBIL score up to a point that will ease the loan application process and ensure that loans are granted. Three days later, the bank performs its due diligence and informs you that your loan application has been rejected!

    So what went wrong?

    CIBIL scores, while they play a huge part in the process, are not the only thing that banks look at before sanctioning your loan. Banks and financial institutions also consider the following:

    • Comments in CIBIL reports – In addition to a numerical score, CIBIL reports also contain remarks and comments by lenders. Banks sometimes offer you the option to settle your loan for a slightly smaller amount than all of your EMIs combined, or offer interest rate reductions, etc. to help you clear your debt. If you settle your loan in any way apart from the terms on which you took the loan, there will be a remark about it in your CIBIL report and this will work against you. If there is any mention of loans being “written off” or “settled”, or amounts being paid after the due date (“DPD” = Days Past Due), banks take these as warning signs and will reject your loan.

    • Standing guarantor on a defaulted loan – A guarantor is considered to be as responsible for loan repayment (even if not in a purely literal capacity) as the borrower. If you have stood guarantor to a loan that has been defaulted, this will affect your CIBIL score and report in a negative way.

    • Defaulter details matching – Banks and financial institutions maintain lists that contain the name, age, address, current employment, and other details of individuals who have defaulted on their payments. If the details you have submitted are (even mistakenly) matched with a defaulter, you will be denied a loan before the bank even checks your CIBIL rating. There have been instances where those who have moved into houses previously occupied by defaulters and submitted that address have been matched with the “address” records of defaulters, suffocating their chances of securing a loan.

    • If you are overleveraged – You can only assign a certain amount of your declared income to clearing debts. If you earn Rs.50,000 per month, and have three other loans you’re clearing by paying Rs. 10,000 per month, each, you’re left with Rs. 20,000 for survival and personal expenditure. Banks will not approve another loan and will deem you overleveraged. Your DTI (debt-to-income) ratio will be unfavourable and you will not be able to allocate more of your income to clearing off your new loan.

    • Inadequate tax-paying history – Banks generally prefer applications from those who have been actively filing income tax for at least two years prior to the application. It is easier to judge the creditworthiness of such individuals as there is an existing record apart from CIBIL that can nudge them in the right direction.

    • Over-borrowing – If you have taken out too many loans in the previous year, regardless of whether you were able to honour them or not, banks will not approve your loan as they deem such individuals as credit hungry. Even though your record is clean, you will be considered a risky candidate who can default at any time.

    • Ratio of secured loans to unsecured loans – Secured loans are those taken against securities like assets or with a guarantor (home loans, automobile loans, etc.) and unsecured loans are taken without any security (personal loans, credit cards, etc.). A favourable ratio would be one which has more secured loans than unsecured ones.

    Anything else I should keep in mind to be viewed favourably by lenders?

    As it’s clear by now, sometimes loan applications can get rejected through no fault of your own, it is important to be diligent and actively involved in managing your finances. It’s also recommended that you check your CIBIL report once every six months to ensure that everything is as you left it.

    FAQs on Reasons for Loan rejection

    Are there any other rejections that happen by association?

    Yes, if you work in a location where a large number of your co-workers have defaulted on loan payments in the past and/or have bad credit scores, the lender will reject your application as you are associated with these people. The lender will assume that since so many of them defaulted on their debts, the company may not be stable in their monthly salary disbursements, or there may be some issue with the company as all the defaulters have only their employment details in common with each other.

    CIBIL Reviews

  • Page 1 of 1
    • ICICI Bank Personal Loan
      "Should try to render a better service"
      ICICI BANK
      0.5 1.0/5 "Really Bad"
      I had undergone a lot of trials and tribulations when I took a personal loan from ICICI. First of all, they had asked for a number of documents, they did not accept my ID card, the process was very lengthy. As I am from credit sourcing we hardly 7 days to disburse the housing loan itself. But ICICI bank takes more than 10 days to disburse the personal loan that too for a person like me who has got a good cibil score. I had been asked to visit the branch due to signature mismatch issue. The branch is 10 kms away from my place they took a long time to verify my signature. I reached the branch by 4.00 pm and only 6.00 pm my issue was fixed by ICICI they took much a long time to resolve my issue. Lastly, they should provide the information about the first EMI on time which is mandate as the customer has no source of knowing it in the first instance.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Oct 01, 2016
    • HDFC Bank Personal Loan
      "Worst personal loan provider"
      HDFC BANK
      0.5 0.5/5 "Unacceptable"
      The processing fee, the interest rate are way too high. I have a very good cibil score, work for an MNC, I was offered loan for high rates. I had some emergency and took it as i was told that part payment and pre closure options are available. All these lies. They only have the option of terminating the loan with a high closure charges of 4.5+%.. Ridiculous!! Worst bank ever. Please don't go for this bank for your own good..
      Was this review helpful? 4
      , bangalore
      Reviewed on Aug 05, 2016
    • HDFC Bank Two Wheeler Loan
      "Flexible norms!"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      Two wheeler loan was processed within a week's time by the executives. I am really comfortable with the way two wheeler loan was processed with HDFC bank. On the same line, the part payment options are very much flexible with them. It would be nice if they provide the credit card to me as I do have a good CIBIL score.
      Was this review helpful? 4
      , nellore
      Reviewed on May 19, 2016
    • HDFC Bank Personal Loan
      "Delayed processing!"
      HDFC BANK
      0.5 2.0/5 "Expected more"
      HDFC bank executives are processing the personal loan in a slow manner. Though I have a good CIBIL score, they are not able to sanction me the expected loan amount as per my requirement. Due to this, I dropped the plan of taking the personal loan from HDFC bank.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Feb 22, 2016
    • Kotak Personal Loan
      "Okay with them..."
      KOTAK MAHINDRA BANK
      0.5 3.0/5 "Satisfactory"
      I am working in kotak bank so, they offered pre approved loan. They offered 10.79% being a salary account holder. 12 to 14% interest for other people who came for personal loan with good cibil score. No processing charges for their account holders.
      Was this review helpful? 2
      , mumbai
      Reviewed on Dec 26, 2015
    • Bank Bazaar Personal Loan
      "Good information!"
      FULLERTON
      0.5 5.0/5 "Blown Away!"
      I am really thankful to the bankbazaar portal, which helped me in getting a clear idea about maintaining my good CIBIL score. Along with this, the portal provided me information regarding various loan products. Initially I applied for a credit card through the portal.
      Was this review helpful? 0
      , mumbai
      Reviewed on Dec 23, 2015
    • ICICI Bank Saving Account
      "personalised services"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I always get personalized services from the ICICI Bank with regards to my salary account which I am maintaining for the past five years. The executives are very friendly and its very easy to process any type of loan from ICICI bank, if we maintain a good CIBIL score.
      Was this review helpful? 0
      , kolkata
      Reviewed on Dec 21, 2015
    • Capital First Personal Loan
      "Worst service"
      CAPITAL FIRST
      0.5 1.0/5 "Really Bad"
      I have apply personal loan from capital first. customer care Personal loan telephone number had not received my call also they have not reply after my mail. While I have pre-aproved PL. They have rejected my file due to I am leave on Rent. I have also Good cibil score. There services are not good. Also they are not update monthly payments history to cibil. I have already take one consumer durable loan from capital first
      Was this review helpful? 7
      , new delhi
      Reviewed on Sep 09, 2015
    • Bank of Maharashtra Home Loan
      "Happy Home Loan!"
      BANK OF MAHARASHTRA
      0.5 5.0/5 "Blown Away!"
      Since the apartment which I bought is already funded by bank of Maharashtra, it is very easy for me to take the home loan with them. They collected only minimal documents and the loan amount got disbursed in 3 days. Verification was very quick and easy due to my good CIBIL score.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 20, 2015
    • HDFC Bank Personal Loan
      "Best"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      I have got the personal loan with the HDFC bank.The rate of interest was 17% and that was huge with them.The processing charge was waived and it finally upto 1%. I am happy with the HDFC.Within 3 days of time the credit got disbursed to my account.I am having good cibil score , so everything got sequentially done up.
      Was this review helpful? 0
      , chennai
      Reviewed on Jul 17, 2015
    • IndusInd Bank Personal Loan
      "My experience with INDUS IND Bank"
      INDUSIND BANK LTD
      0.5 2.5/5 "Just OK"
      In spite of me submitting all the required documents for personal loan IndusInd Bank was unable to provide the personal loan . Also, cibil score is really good. In spite of me having a very good cibil score they failed to offer the personal loan to me. I wonder why.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jul 14, 2015
    • Axis Bank Personal Loan
      "Plan with Intelligence!!"
      AXIS BANK
      0.5 4.0/5 "Great!"
      The service offered by Axis Bank is good for the personal loan. I hold my salary account with this bank and so it was only minimum documents asked. The best part is the processing as it was very fast and within 7 days my loan got disbursed. I did not face any issues as everything went on smooth as I had a very good CIBIL score during the processing of the loan.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 16, 2015
    • ICICI Bank Personal Loan
      "Need to improve"
      ICICI BANK
      0.5 1.0/5 "Really Bad"
      I got the call with ICICI bank for the personal loan and they provided the rate of interest and every details.The process went fine till the document submission after I submitted that I dint receive the call from ICICI and they canceled my application without any reason.I have assets, good cibil score and all and they need to tell the reason if they dint process my application.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 11, 2015
    • ICICI Bank Personal Loan
      "They dont value the customers."
      ICICI BANK
      0.5 1.0/5 "Really Bad"
      My experience with ICICI Bnak was worst for the personal loan I applied. Being an account holder of ICICI Bank for the past many years there is no proper response from the Bank. They did not update me with any informations and why they rejected my application. Inspite of me maintaining a good CIBIL score there was no proper explanation given by the Bank to me. Basically they dont encourage the existing customers of the Bank and finally they try to loose them.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 06, 2015
    • HDFC Bank Personal Loan
      "Not that good"
      HDFC BANK
      0.5 2.0/5 "Expected more"
      HDFC Bank personal loan process is really good. I was in need of personal loan for 2lakhs however they offered me only 1.37 lakhs that was my first concern. Despite of me holding a very good cibil score of 810 the managed to me offer me only 1.37 lakhs. Perhaps the response provided them was good they took around 15 days of time to provide this loan.
      Was this review helpful? 0
      , new delhi
      Reviewed on Apr 20, 2015
    • HDFC Limited Home Loan
      "Quite tricky"
      HDFC LIMITED
      0.5 3.5/5 "Pretty good"
      I didnt face much challenges while applying home loan with HDFC limited. Service was quite good. Every 2 days they called me and asked for the documents . They properly did their follow ups. I really didnt need the loan hence I requested to close . I calculated the interest rates with other banks. The process was quite tricky. After submitting the documents they are still looking for approvals. Actually I have applied for home renovation. The entire process was lengthy . Though I had a good cibil score. They may provide the gateway for existing customers
      Was this review helpful? 0
      , delhi
      Reviewed on Sep 23, 2014
    • Axis Bank Car Loan
      "Good"
      AXIS BANK
      0.5 2.5/5 "Just OK"
      I have not yet taken the car loan with Axis Bank when compared with other competitors in the market they are charging for prepayment and partial payment and we cannot change loan re-payment they are providing repayment tenure as maximum 5 years where other banks are up to 7 years and even other banks are ready to match the competitive interest rates hdfc ready to match icici was ready to provide at 10.50% but this bank was very rigid did not reduce the interest rate am having a good cibil score in spite of that they did not reduce the rate
      Was this review helpful? 0
      , mumbai
      Reviewed on Aug 06, 2014
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