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Top reasons for your application being rejected by a bank

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. 

Bala Parthasarathy, Co-founder & CEO, MoneyTap
Bala Parthasarathy, Co-founder & CEO, MoneyTap
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I have spend over 16 years in the world of start- ups from being a serial entrepreneur to a venture capitalist and then back to an entrepreneur. Currently I am the CEO & Co- founder of MoneyTap (http://www.moneytap.com/) , India's first app- based credit line. I was one of the co-founders of Angelprime (now Prime Venture Partners), a seed – stage fund based in Bangalore. From 2011 - 2016 I was deeply involved in companies such as ZipDial (acquired by Twitter), Ezetap, SmartOwner, Vidgyor, Happay, HackerEarth, Synup, Healthify.me, Quizziz and more. Late 2016 launched a fintech start up, MoneyTap, along with my two co- founders. I have raised three companies, one of them being Snapfish, bought by Hewlett Packard in 2005. As General Manager and MD for Snapfish International, I was responsible for its growth into becoming the world's largest online photo site with 100M+ users, and expansion into 20+ countries in Europe and Asia Pacific. In my early days, I was a co-founder of iSelect and then Wyatt River Software that was acquired by SafeNet and started my career as one of the early engineers who built Digital Link, which went public in 1993. I have also worked with Mr. Nandan Nilekani, Chairman, UIDAI, and played a key role in defining the application strategy and developer ecosystem on Aadhaar from 2010- 2011. My love for travel & adventure has taken me across 80 countries in the world and driven me to acquire fluent spoken Spanish and French and grasp German, Portuguese and Italian. I have climbed the Kilimanjaro, trekked the Andes, Alps and the Himalayas, motor-biked across the African continent, up the highest motor able road in the world at Leh, ridden boats, camels and ramshackle trains - in the quest for experiencing those indescribable moments which have made me what I am today. I share my love for the world and adventure with my wife, Dana and our three kids. In 2006, I was recognized by University of California, Santa Cruz with its highest honor for alumni as a "Distinguished Alumnus". I have done my bachelor's degree from Indian Institute of Technology, Madras.