Bank loan: What are the reasons behind loan rejections – know important parameters

Banks and financial institutions offer different types of loans to consumers. The loan amount for various purposes attracts a certain interest rate. The bank collects the loan amount from customers in the form of Equated Monthly Installment (EMI) for a pre-defined period. However, getting a loan sometimes becomes a challenging task due to lack of proper documents, poor credit score and others. As a result, institutions reject loan applications. We will tell you key things to keep in mind while applying for loan:


Loan payment is only possible when he/she has stable employment/business. The source of income should be stable so that the loan amount can be repaid within the time period. Banks consider your employment very important and the stability of your income assures them that you will repay the loan on time. People who switch jobs regularly, or those who are unemployed for extended periods, may not be able to procure loans easily.

Credit score

When he/she applies for a loan, the first thing checked by any bank is the credit score. The credit score is indicated whether the person pays the loan on time or not. If the credit score is poor – 600 or below — it may be difficult for you to get a home loan.

If a score of 700 and above is considered good and your chances of getting a loan are very high. Indian banks take credit score data from CIBIL.

Inaccurate details in the application

If the person who is seeking a loan has details such as residence, phone number and other account details that are inaccurate, it will be difficult to generate the necessary information about you.  

Property not approved by financial institutions

If she/he has applied for a loan to purchase property and the builder is not approved by the financial institutions. Then the loan will not be granted.

Pending Loans

Banks also access the financial profile of loan seekers, even if the person has taken a loan from third-party banks. This is why it is advisable to avail of loans only when necessary and ensure timely payment of installments. If you have multiple ongoing n getting a loan chance decrease.
To successfully get a loan application passed, ensure that the current debts are paid and you have a stable financial profile. Loan seekers can also check the eligibility criteria on the official website of banks.

Also Read: How to become crorepati by PPF investment | PPF calculator, interest rate, limit

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