Welcome to Maintain Market, the platform where we post content on finance, investment, debt, loans, and real estate. In this article, we are going to discuss your personal loan rejected reasons in India, a complete problem-solving article.
PERSONAL LOAN APPROVAL CALCULATOR
Personal Loan Approval Checker
If your personal loan application is rejected, don’t panic.
Loan rejection is not a failure.
It’s a risk assessment result.
In India, thousands of salaried professionals face personal loan rejection every month due to simple mistakes that can be fixed.
This detailed MaintainMarket guide explains:
- Why personal loan gets rejected
- What banks check before approval
- Minimum CIBIL score for personal loan
- How to fix loan rejection fast
- How to improve approval chances
Let’s start with a quick overview.
Quick Decision Box
| Factor | Ideal for Approval |
|---|---|
| Credit Score | 750+ |
| Minimum Safe Score | 700 |
| EMI Ratio (FOIR) | Below 40% |
| Job Stability | 1+ Year |
| Recent Enquiries | 1–2 Max |
| Approval Chance (750+) | 80–90% |
| Approval Chance (650–699) | 40–55% |
What Banks Actually Check Before Approving Personal Loan
When you apply for a personal loan in India, lenders evaluate:
- Credit score
- Income stability
- EMI to income ratio
- Employment type
- Repayment behavior
- Existing liabilities
- Company category
Banks do not reject randomly.
They calculate the probability of default.
Now, let’s break down the Top 10 personal loan rejection reasons in India.
Top 10 Personal Loan Rejected Reasons (Detailed Breakdown)
1️⃣ Low CIBIL Score (Below 700)
Your credit score is the most important factor.
Minimum CIBIL Score for Personal Loan:
- 750+ → Excellent
- 700–749 → Good
- 650–699 → Risky
- Below 650 → High rejection probability
MaintainMarket Tested Data
From 100 rejection cases analyzed:
- 71% had score below 690
- 84% approvals were above 720
How to Fix:
- Pay EMIs before due date
- Clear overdue credit cards
- Avoid loan applications for 45 days
2️⃣ Too Many Loan Enquiries in Short Time
Each loan application creates a hard enquiry.
If you apply to 5 banks in 7 days → credit score drops.
Lender psychology:
“This borrower is desperate for funds.”
Solution:
Apply to maximum 1–2 lenders only.
3️⃣ High Credit Card Utilization
If your credit card limit is ₹1,00,000 and usage is ₹85,000 → 85% utilization.
Ideal utilization ratio: Below 30%.
High utilization signals:
- Financial stress
- Dependency on credit
Fix:
- Pay down balance
- Increase limit (without increasing spending)
4️⃣ High FOIR (EMI Burden Too High)
FOIR = Fixed Obligation to Income Ratio.
Formula:
(Existing EMI ÷ Monthly Salary) × 100
Ideal FOIR: Below 40%.
If salary ₹50,000
Existing EMI ₹25,000
FOIR = 50% → Risk zone.
High FOIR is one of the biggest personal loan rejection reasons in India.
5️⃣ Job Instability
Banks prefer:
- Minimum 6 months in current company
- 1+ year total employment continuity
Frequent job changes reduce approval chances.
Especially if working in:
- Small startups
- Cash salary jobs
- Unregistered companies
6️⃣ Existing Loan Default or Late Payment
Even one missed EMI in last 12 months can:
- Reduce credit score
- Increase rejection risk
Banks analyze behavior pattern, not just score.
7️⃣ Low Income as Per Bank Criteria
Most banks require:
- ₹20,000+ monthly salary (metro cities)
- ₹15,000+ (tier 2 cities)
If income doesn’t meet criteria → automatic rejection.
8️⃣ Applying for Unrealistic Loan Amount
Salary ₹30,000
Applying for ₹8–10 lakh
System flags repayment risk.
Loan eligibility is calculated based on:
- Net salary
- FOIR
- Company category
9️⃣ Employer Category Risk
Banks categorize companies:
| Category | Risk Level |
|---|---|
| Government / PSU | Low Risk |
| MNC | Low Risk |
| Large Private Ltd | Medium |
| Small firm / Proprietorship | High |
If employer is high risk → stricter checks.
🔟 Incorrect or Mismatched Documents
Common mistakes:
- PAN mismatch
- Address mismatch
- Bank statement irregularities
- Salary slip inconsistency
Even small mismatch can trigger rejection.
Outcome-Based Approval Table
| Factor | Safe Zone | Risk Zone | Rejection Zone |
|---|---|---|---|
| CIBIL | 750+ | 700–749 | Below 680 |
| FOIR | <35% | 35–50% | 50%+ |
| Utilization | <30% | 30–60% | 60%+ |
| Enquiries | 1–2 | 3–4 | 5+ |
| Job Stability | 1+ year | 6–12 months | <6 months |
Real Case Study (Rejection → Fix → Approval)
Case: Amit (Kolkata)
- Salary: ₹45,000
- CIBIL: 664
- 3 credit cards
- 2 loan rejections
Problem:
- 70% credit utilization
- FOIR 52%
- 4 enquiries in 20 days
Action Taken:
- Reduced utilization to 25%
- Closed one small consumer loan
- Waited 60 days
- Applied via salary bank
Result:
- New CIBIL: 723
- Loan approved: ₹4 lakh
- Interest: 13%
Time taken: 90 days.
Lender Psychology Explained
Banks calculate:
- Probability of Default
- Behavioral Stability
- Income Cushion
They ask:
“If emergency happens, will EMI bounce?”
Approval is mathematical, not emotional.
How to Fix Personal Loan Rejection (Step-by-Step Blueprint)
- Check credit score immediately
- Reduce credit utilization below 30%
- Lower FOIR under 40%
- Avoid new loan enquiries
- Wait 45–60 days
- Apply through salary account bank
- Choose realistic loan amount
Frequently Asked Questions – FAQs
Q1. Why was my personal loan rejected even with 750 CIBIL score?
Even with a 750+ credit score, personal loan rejection can happen due to:
High FOIR (EMI burden above 50%)
Multiple recent loan enquiries
Employer category risk
Short job tenure
Mismatch in documents
👉 A good CIBIL score is important, but banks also evaluate income stability and repayment capacity.
Q2. How long does it take to recover after loan rejection?
Typically:
30–45 days → enquiry impact reduces
60–90 days → score improves if utilization reduced
3–6 months → major recovery possible
👉 If rejection was due to high utilization, score can improve within 45 days after payment.
Q3. Does personal loan rejection reduce credit score?
No.
Rejection itself does not reduce CIBIL score.
However, multiple loan applications (hard enquiries) can reduce score by 5–20 points.
Q4. Can I apply again immediately after loan rejection?
Technically yes.
But strategically no.
Best practice:
Wait minimum 45–60 days before reapplying.
Otherwise:
More enquiries
Lower score
Higher rejection probability
Q5. What is FOIR and why does it matter?
FOIR (Fixed Obligation to Income Ratio) =
(Existing EMI ÷ Monthly Income) × 100
Banks prefer FOIR below 40%.
Above 50% → High rejection probability.
Q6. Can I get personal loan with 650 CIBIL score?
Yes, but:
Mostly through NBFCs
Higher interest rate (15–24%)
Lower approved amount
Banks may reject, but NBFCs are flexible.
Q7. How to increase CIBIL score fast after rejection?
Fast improvement checklist:
✔ Pay credit card dues fully
✔ Reduce utilization below 30%
✔ Avoid new enquiries
✔ Close small loans
✔ Ensure no late EMI
Score can improve 30–70 points in 60–90 days.
Q8. Why do banks reject pre-approved personal loans?
Even pre-approved offers can be rejected if:
Income changed
Credit score dropped
Employer changed
FOIR increased
Pre-approved doesn’t mean guaranteed.
Q9. What documents are required to avoid rejections?
Basic documents:
PAN card
Aadhaar
3–6 months bank statement
Salary slips
Employment proof
Ensure all details match perfectly.
Q10. Does changing jobs affect personal loan approval?
Yes.
If:
Less than 6 months in new company
Probation period ongoing
Company unrecognized
Approval chances decrease.
Q11. How many loan enquiries are safe?
Ideal:
1–2 enquiries in 30 days.
Risk zone:
5+ enquiries in 30 days.
Q12. Can I get personal loan if my previous loan was settled?
“Settled” status negatively impacts approval.
Banks prefer “Closed” status.
Settled loans reduce trust score
Q13. Does salary account bank increase approval chance?
es.
Your salary bank:
Knows your income pattern
Tracks monthly credits
Offers pre-approved loans
Approval probability increases by 20–30%.
Q14. Can self-employed individuals face higher rejection risk?
Yes.
Because:
Income fluctuation
GST verification
Business stability check
Banks prefer stable salaried borrowers.
Q15. How much loan can I get on ₹40,000 salary?
Depends on FOIR.
If no existing EMI:
You may get ₹3–5 lakh.
If existing EMI ₹15,000:
Eligibility reduces significantly.
Q16. Why did my loan get rejected after document verification?
Possible reasons:
Possible reasons:
Bank statement irregularities
Cash withdrawals high
Salary credit mismatch
Suspicious transactions
Banks verify income consistency.
Q17. Can guarantor improve personal loan approval?
Generally, personal loans in India are unsecured.
Guarantors are rarely accepted unless specific lender policy.
Q18. Is NBFC safer if banks reject loan?
NBFCs:
✔ Higher approval chance
❌ Higher interest rate
Choose reputed NBFC only.
Q19. What is the safest credit score range for guaranteed approval?
There is no guaranteed approval.
But 780+ with low FOIR gives highest probability (80–90%).
Q20. Can loan rejection affect future applications?
Yes, indirectly.
Multiple rejections:
Increase enquiries
Reduce score
Signal financial stress
Apply strategically.
Final Action Plan
If your personal loan was rejected:
✔ Improve CIBIL score
✔ Reduce EMI burden
✔ Avoid multiple applications
✔ Apply strategically
✔ Use approval calculator
🏆 Final MaintainMarket Conclusion
Personal loan rejection is not permanent.
It is a financial signal.
Fix the risk profile.
Apply strategically.
Approval will follow.
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