Why Loan Applications Get Rejected

This is one of the most critical factors. If your total monthly EMIs are a large portion of your monthly income (often over 40-50%), lenders see you as a high-risk applicant. It suggests you might struggle to make new payments.

Having multiple active loans (personal, car, credit cards) can be a red flag. Lenders might worry that your financial obligations are spread too thin, even if your income is high.

Consistently using a large percentage (e.g., over 70%) of your credit card limit is known as high credit utilization. This signals to lenders that you are heavily reliant on credit, which can be a sign of financial stress.

Your repayment history is a direct indicator of your financial discipline. Even one or two missed payments in the last 12 months can significantly hurt your chances of getting a new loan, as it questions your ability to pay on time.

While not the only factor, a low credit score (typically below 650-700) is often an automatic filter for many lenders. It summarizes past credit behavior and a low number indicates past difficulties with repayment.