There are several factors that play a role in the approval or rejection of credit applications, which can include a loan, a credit card or a credit line. If your application has not been approved, it could be due to one or more of the reasons listed below:
Other Payment Obligations: If your credit report shows high outstanding credit card payments (compared to your salary) or a significant loan amount, banks may choose to reject the application. This is in your interest because it ensures you do not fall into a debt trap.
Irregular Repayment History: This again is reflected in your credit report. You may have multiple credit cards approved, but if you haven’t been paying the bills entirely or missing them altogether, getting a new credit line approved may be tough. Banks look for individuals with a good track record in terms of repayments.
Over-Leveraged: Have you been approved for a personal loan from a different bank recently? To avoid overleveraging, banks may reject your application if this is the case.
Multiple Applications for Personal Loan: If you have been applying for personal loans at different banks, all these banks will submit an enquiry at the credit bureau. This information is available to other banks through the credit report and may not have a favorable impact on your application. To avoid this situation, find out all about the personal loans offered by various banks in advance and apply only to the most suitable bank.
Irregular Salary Payout: If you are new to credit, and your salary account does not reflect regular and timely salary credits, it is possible your application may not be approved.
The reasons listed above cannot be resolved overnight. One will need to take corrective measures that will reflect after a few months or a year. It is best not to apply for new credit until then.
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