How to Avoid Rejection of Personal Loan Application

With Personal Loans, you can pay for all kinds of expenses—from medical emergencies to leisurely spends. This versatile loan is easy to procure, with banks crediting your account within hours. While most lenders set simple eligibility criteria to enable all applicants to obtain the loan easily, there could be times when your application status may be left hanging in the balance. As the applicant, you can take certain measures to ensure that the lender does not reject your Personal Loan application. Here are some tips to avoid loan rejection:

• Maintain a low FOIR
  
  While accepting loan applications, lenders assess various criteria. Of these, the most crucial is your Fixed Obligations To Income Ratio or FOIR. In simple words, your FOIR is your debt-to-income ratio. If your FOIR or debt rate is low, lenders consider that your net monthly financial obligations are lower than your income, thus reflecting a better loan repayment capacity on your part. For lenders, a low FOIR means you have a higher disposable income and can repay your EMIs timely, making you the ideal candidate for a Personal Loan.
  
  Read more about FOIR and how it can affect your Personal Loan application by clicking here.
  
  
• Maintain a High Credit Score
  
  Today, no lender approves your Personal Loan request without assessing your CIBIL or credit score. In fact, you must try to maintain a high credit score at all times, whether or not you need a loan. Maintaining a high credit score of 750+ out of 900 points translates to many perks. For one, it demonstrates your excellent credit repayment behaviour to lenders, thus expediting your loan approval. Furthermore, it builds trust among lenders that you will not default on loan repayment. Also, maintaining a high credit score consistently and continuously may enable you to negotiate your preferred interest rate on the Personal Loan and obtain the maximum loan repayment tenure.
  
  
• Keep an eye on your credit utilisation
  
  Another simple trick to avoid rejection of a Personal Loan application is to limit your credit utilisation. If you use multiple credit cards, it may make sense to divide your regular expenses among them. Doing so demonstrates that you are not entirely dependent on a single credit card. This also has a positive benefit on your credit utilisation, as it shows that you are able to function comfortably within your means.
  
  
• Pay off your credit card dues on time
  
  Besides limiting the utilisation of credit card limit, you should also pay off your credit card dues, in full and on time. Paying off your credit card dues in smaller portions or instalments can attract interest. But paying off the dues on the stipulated date each month, like clockwork, builds lenders’ confidence when you apply for a Personal Loan or any other loan. Remember, credit card dues payments and credit scores are interconnected and not paying off the dues can impact your credit scores significantly.
  
  
• Show all your income sources
  
  While your salary may be your primary income source, it helps to show lenders any additional income sources you may have. For instance, if you have invested in monthly income fixed deposits, or if you receive monthly incentives, variable pay, or have other passive income sources, you should list them sources while applying for a Personal Loan. Added income is always a benefit and reduces your chances of loan rejection significantly.
  
  Apply for HDFC Bank Personal Loans
  
  HDFC Bank Personal Loans are multi-purpose loans that help you fund financial contingencies and pay for your leisurely expenses. You can apply for the loan online, directly through our website and get loans of up to ₹40 lakh. Moreover, you can take advantage of our paperless loan application process, coupled with instant disbursal, available to selected pre-approved customers.
  
  Looking to apply for a Personal Loan? Click here to get started!
  
  *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Personal Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.