Tips for Obtaining Approval for a Personal Loan: How to Overcome Rejection and Achieve Success

Remember, a Personal Loan Rejection from one Bank doesn’t mean a blanket rejection. There’s always a chance for approval from another bank. Staying hopeful and exploring your options is crucial, as this resilience can lead to success.

Have you ever applied for a Personal Loan and been rejected? It’s a shared experience. Many of us have felt the surprise and confusion of rejection, even when everything seems to be in order. You’re not alone in this. It’s a common situation that many people find themselves in.

On the other hand, customers with an aberration in their CIBIL record may feel it is no big deal if they have not paid their Personal Loan EMI on time for a short period but are currently on track. Let us look at situations when one lender rejects your Personal Loan, which an alternate financer can approve. Remember, there’s always a chance for approval from an alternate financer, so don’t lose hope. Keep in mind your financial journey is not over yet.

• The Company is Not Featured on the Approved Company Category List

Before Applying for a Personal Loan, it is crucial to confirm that your company is approved per the bank’s policy. Lenders want to be sure the company is solvent and will pay salaries on time, so they prefer to fund employees of approved concerns. Refer to the HDFC Bank Company Category List of approved companies, which most lenders acknowledge. Most lenders will process your loan if your employer is listed on the list, reducing the risk of rejection.

• Get Your Personal Loan Sanctioned by a Financer that Lends to Non-Listed Companies

Don’t limit your options to just one lender. You can check with an alternate lender to see if your employer is featured in their company category list. Some financiers, such as ICICI Bank Personal Loan and YES Bank Personal Loan, process Personal Loans for applicants employed with non-listed companies. By exploring these options, you can increase your chances of getting your Personal Loan Approved.

• Existing CIBIL and CIBIL Score

Your CIBIL Score or history details all credit used and repayment patterns. The bank checks the customer’s credit history to seek assurance that the applicant will repay the loan on time. Some lenders prefer only to fund applicants with a sound credit history and have regulated a minimal CIBIL Score for processing a Personal Loan Application. The acceptable score for most Banks ranges from 700 to 730 points. If your CIBIL Score is below the lender’s required benchmark, the application is rejected after the CIBIL inquiry. Understanding your CIBIL Score and credit history is crucial, as it can help you make informed decisions and improve your chances of loan approval.

• Check Your CIBIL Score Before Applying for a Personal Loan

If you are a first-time credit seeker and have not used a Credit Card or taken a loan, your CIBIL will reflect as a nil score. Look out for lenders who do not require a CIBIL Score to process a Personal Loan. Apply for an HDFC Bank Personal Loan, as the HDFC Bank processes applicants’ loan requests without a CIBIL Score.

Keeping a Tab on your CIBIL Score is a good routine if you have previously used Credit. Before Applying for a Personal Loan, check your CIBIL Score to see if it is acceptable to the particular Lender. For a YES Bank Personal Loan, 730 points are the minimal basis points that the YES Bank considers when processing a Personal Loan. Check your CIBIL Score before Applying for a Personal Loan to avoid delays and a denial.

• Personal Loan Rejection Due to a Verification Decline

Verifying a customer’s residence and office premises is mandatory to approve a Personal loan. Most banks and NBFCs outsource the verification process to a third party. The application could be declined due to a verification failure for the following reasons.

• The verification executive is not allowed to enter the office premises.
• The office or residence address is wrongly noted in the customer details.
• The residence premises are locked, or no one can verify the details.
• The applicant is unreachable on the phone.
• Ensure that your verification is a success.

The Personal Loan is unsecured and forwarded without any security therefore, it is vital to the Bank that the customer is contactable in case of non-payment of dues. The verification, therefore, is an essential part of the process. To ensure a successful verification, take note of the following:

• Give a detailed residence address with a prominent landmark.
• Submit an alternate contact number for easy contact ability.
• Alert the office guard and staff about the due verification.
• If single and residing alone, inform the landlord and neighbours about the Bank visit.
• Previous decline or history of unsuccessful repayments record.

Banks keep records of all Personal Loan Applications processed, and the result is noted. If your application has been declined due to a discrepancy in the documentation or if the Bank has recorded your documents as suspicious or not genuine, this will show up the next time you apply. Your request will be declined in the primary stage of the process.

When You Reapply, The Bank Will See the Reason for the Decline and Process Your Application Cautiously

• Try to mitigate your previous record or apply to an alternate lender.

Try to clear your previous record with the Bank that denied your application. Ask the Lender to reopen the last delinquency issue, such as when your PAN Card was declared invalid. Be ready to show them your original document and clarify the issue. If funds are needed urgently, apply with an alternate lender with whom you have an excellent previous relationship.

• A Bank denies your Personal Loan request due to financial eligibility or being overleveraged.

The Personal Loan Application is rejected if the Bank feels that you cannot afford the monthly instalment for the loan amount applied, as per the calculations for financial eligibility.  Lenders have a policy for calculating the funds that can be issued as Personal Loans. The basics include:

• The employer category is as per the HDFC Bank Company List.
• The net monthly income is transferred to the Bank account.
• The current obligations include credit card dues and other EMI payments.

If the applicant has an excess of EMI being paid or the salary is insufficient to afford an extra EMI after the monthly expense, the Bank will not approve the request.

• Create additional Eligibility for a Personal Loan.

If a lender rejects your application if the criteria for financial eligibility are unmet or you are declared overleveraged, you can work on creating surplus eligibility. First, check the following:

• Are your Credit Card bills paid, or is there an overdue?
• What is the interest rate for the loans you are currently running?
• What is the total EMI being paid?

Actions You Can Take to Create Further Eligibility

• Clear your Credit Card dues immediately, as a percentage of the bills due are counted in the eligibility factor. Besides, the interest due on Credit Card outstanding is 36% per annum, which can lead to a debt trap.
• ICICI Bank offers a Personal Loan Top-up to existing customers who are paying their EMI promptly and have a healthy Credit Score. A top-up creates additional eligibility as the existing account is closed and a new loan is generated. The principal amount repaid can be issued to the customer as a top-up, with an extended tenure and a suitable EMI.
• Apply for a Personal Loan Balance Transfer of all your existing Personal Loans. The HDFC Balance Transfer programme allows applicants to club all the existing loans under a single umbrella. The interest rate charged for a Personal Loan Balance Transfer to HDFC Bank is the lowest in the industry.
• Thus, after the Balance Transfer, you will pay a single EMI for all your Personal Loans, and with a lower interest rate and extended tenure, you will be eligible for an additional loan amount. Apply for a Personal Loan Transfer and a Top-up with HDFC Bank to fulfil your loan requirements.

In Conclusion, prevalent Banks today that issue Personal Loans have similar policies, but they differ on some fundamental policies. Our experience and in-depth knowledge of the policies of prominent Banks and NBFCs can help and guide you, so do not take a Personal Loan Rejection from one Bank as final. You can fulfil your Personal Loan needs by applying to the right lender.

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