First, what to do after a rejection
- Don't apply elsewhere immediately. Each formal application can add a hard enquiry, and a cluster of them can make you look credit-hungry.
- Ask for the reason. Lenders may not share every detail of their policy, but it's worth asking which requirement you missed.
- Check your credit report. Look for wrong balances, loans you don't recognise, closed accounts still shown as open, and late payments that aren't yours.
- Run your numbers. Our eligibility calculator lists the common checks and shows which ones you may be missing. It's an estimate rather than any lender's actual decision, but it's a useful starting point.
The common reasons
1. Your income can't support the EMI
Lenders limit how much of your income can go on EMIs, known as FOIR. If your existing EMIs and card dues already use most of that, there may be little room left, however good your score is.
What helps: close a small loan, clear card dues, ask for a smaller amount or a longer tenure, or add an earning co-applicant.
2. A low or thin credit score
For unsecured loans, 650 is a common minimum, and 750 or above tends to get the best rates. See the score ranges for each loan. With no credit history, some lenders may be cautious or offer less.
What helps: pay on time, keep card usage below about 30% of your limit, dispute any errors, and start with a secured card if you have no history.
3. A default, settlement or write-off
Recent defaults are among the hardest problems to get past, and an account marked "Settled" tells lenders that it wasn't paid in full.
What helps: clear what you can, ask about closing the account properly, get a No Dues Certificate, and check that the report has been updated. Then give yourself time to build a clean record.
4. Too many recent applications
Several applications in a short period can suggest financial stress, even if each one was just shopping around.
What helps: pause for 3 to 6 months, then apply to one well-chosen lender. Using a calculator or viewing your own report isn't a hard enquiry.
5. Job or business history
Lenders like stability. Being new in a job, moving often, or having a young business can all count against you. Some also rate employers by category.
What helps: complete 6 to 12 months with your employer, or 2 to 3 years in business with returns filed. Your salary-account bank may be more flexible.
6. Income or documents that don't match
Differences between your application, salary slips, bank statements and ITR can stop a file. So can a different name or date of birth across your PAN and Aadhaar.
What helps: fix KYC mismatches first and make sure that the income you declare shows up in your records. Never alter a document, since this can have serious consequences beyond a rejection.
7. Age and tenure limits
Loans generally need to end by a certain age. Near that limit, the tenure shrinks, the EMI rises and you may no longer pass the income check.
What helps: add a younger earning co-applicant, or borrow less.
8. Problems with the property or the car
For secured loans, the asset is checked as well as the borrower. An unclear title, an unapproved plan or an old car can lead to rejection or a smaller loan.
What helps: get the documents checked early, ideally before you pay a large booking amount. See our home loan down payment guide for planning a gap.
Rejected despite a good score?
A high CIBIL score shows how you've handled credit, but it doesn't prove that you can afford a new loan. That's why someone with a 780 score can still be turned down. The usual causes are a high FOIR, too many recent applications, an income or employer outside the lender's policy, or a problem with the property. Each lender also has its own rules, so another lender may decide differently.
Before you apply again
- Fix the actual cause. Applying with the same profile is likely to get the same answer.
- Choose one suitable lender. Banks where you hold your main account can already see your income and may have pre-approved offers.
- Ask for what your profile supports. A smaller request that fits your limits is more likely to go through.
- Avoid "guaranteed approval" offers. Be wary of anyone who asks for an upfront fee, and check that a lender is regulated before you share documents.
For more ways to improve your profile, read how to increase loan eligibility.