Personal Loan

Top Reasons behind Personal Loan Rejections Even After Having a Good CIBIL Score


Banks and lenders use the CIBIL score to determine your creditworthiness. While it isn’t the only factor the lender examines when deciding to grant you a loan, a lot is riding on CIBIL scores. A lender can reject a personal loan for several reasons even if you have a high CIBIL score. If you are applying for a loan, you should know these reasons.

Here are 13 reasons your application might be rejected.

Top 13 reasons behind personal loan rejections

You borrow loans often.

A history of borrowing can result in personal loan denial even with an excellent CIBIL score. It raises red flags for lenders, making them suspicious of your financial stability. They will still see you as a high-risk client. It is true even if you make payments on time or have paid off all debt.

They will also be cautious about providing you with more credit. That’s because they fear you will be unable to bear the extra financial strain and delay payments.

Your CIBIL report has negative comments.

Lenders can decline a personal loan application because of the feedback in the CIBIL report. Such feedback can include (but is not limited to) a request for a reduced interest rate, a late EMI payment, etc. Your bad repayment practices are mentioned in detail in the report’s comments.

Lenders often review an applicant’s CIBIL history before giving credit. Hence, any negative comments on your report are harmful. You can try to remove these comments by:

  • Settling with the creditors
  • Acquiring a goodwill removal
  • Repaying all the loans

Your career or salary is unstable.

Lenders can still reject a personal loan if your employment is unstable or the lender has flagged your company. Changing your jobs too frequently can also affect your chances of getting a personal loan because lenders will question your employability.

If you own a business, lenders will be more mindful of your application if it does not have stable profits.

Lenders will have more faith in you as a responsible borrower only if they know you have a secure career and income stream. They will not see you as a viable prospect if they think that you switch jobs very often and have an unstable income. Therefore, make sure your CV and career do not affect your creditability.

You provided the wrong information.

Your credit report has your date of birth, PAN number, address, age, gender, occupation and many other details. This information is cross-checked when you apply for a loan. Your application can be rejected if the information you provide is inaccurate or a lie.

You have a poor tax payment history.

Irregular or incorrect tax payments are another common cause of loan denial. Your loan application can get rejected if you have a history of making income tax payments.

You have a history of loan rejections.

Previous loan applications, whether accepted or rejected, are mentioned in your credit history. Lenders will review your credit record after you submit a new personal loan application. If your application has been denied before, lenders may not grant you a personal loan this time.

Your co-applicant has a bad CIBIL score.

A lender will consider the loan history of both applicants. The lender can decline your loan application if your co-applicant has a poor CIBIL score. As a result, before requesting a loan, it is wise to research the CIBIL score of your co-applicant.

You have not balanced your loans.

To maintain a good credit score, you have to distribute your loans. Lenders can reject your application if you have too much credit-based debt. Alternatively, they can decline your application if you have given many assets as collateral.

You have made too many hard enquiries.

When checking your credit, you make a “soft inquiry” to see whether there have been any recent changes. Any damage to your credit score from these queries is minimal. Unlike a soft inquiry, a hard inquiry is when you request your credit report.

Lenders can reject your loan application if you contact them many times. Hence, wait a bit before attempting to get a new loan to avoid rigorous credit checks.

You provide insufficient financial details.

A loan application can get denied if it does not provide enough financial details. Lenders often review your financial documents. Hence, if there’s any disparity, your loan will get rejected even after a good credit score. 

You cannot provide the relevant proof.

A personal loan application can be rejected if the lender cannot confirm all details. Lenders require proof of income, residence, employment, identity, etc.

Your age is too high.

A loan application can get denied if you are close to retirement age. Creditors, banks, and financial intermediaries are cautious about extending credit to such borrowers. That’s because they may have no means of paying back their debts.

So, age determines whether the personal loan application gets approved.

Your income is low.

Low income will reduce your chances of getting a personal loan. Most lenders will use your monthly salary as a benchmark. They’ll use it to determine your repayment ability. Also, lenders often have a salary threshold ranging from Rs 25,000 to Rs 50,000.

Thus, your loan application can get denied if your salary is below the threshold. You can increase your income by adding extra income. You can add income from rent(s) or investment gains.

Loan providers screen applicants with great care before approving a personal loan. They seek applicants who can pay back the loan. Therefore, providing all the details is necessary.


You must manage your finances well to keep a personal loan application in check. The lender can deny your request if you have a history of late payments or default.

Your capacity to repay a loan is evaluated based on several criteria. Your credit score is an important factor. Age, employment history, and income play a role in personal loan applications

Looking for a quick personal loan? Apply for a Piramal Finance personal loan now and get your eligibility evaluated.