Daniel Cook

Looking to avoid your personal loan application from being rejected? Before your credit card or loan can be approved, your issuer or loan provider must adhere to their internal guidelines before. There are some important reasons that can make a credit card or loan application rejected. Continue below to uncover a few you should know.

1. Insufficient or Poor Credit History

When you've had problems repaying your previous debts, such as credit cards or any loans, your loan provider may decline your application. Lenders use this information during their loan underwriting/approval process. This is why it is important to always check your credit score before applying for a loan.

A credit score is calculated based on your credit history and previous ability/inability to pay back any previous loans or credit card debts

Financial delinquency: loan providers also considers the type of delinquency and how long it has been since your last loan payment on any and/or all loans or outstanding Credit Card debt. Having a 90-day lateness on your EMI or credit Card even years ago will affect your application negatively.

Many Inquiries: Applying for too many Credit Cards and/or loans within a short period of time can negatively affect your loan application as well.

To Maintain A Higher Credit Score, Follow These Rules

  • Make your loan repayments on time.
  • Do not max out your credit limit.
  • Closeout all old loans before opening another one.
  • Avoid too many hard credit inquiries. (Credit card applications for example)
  • Every month ensure you monitor your co-signed, guaranteed and joint accounts.

2. Poor Banking History or No Checking Account

Lenders may also verify your income as well as review your bank accounts to understand your banking behavior. Having a insufficient funds, going into an overdraft, having cheques bounce and keeping a minimal balance can also lead to loan and credit card application denials.

3. Unstable Employment History

Loan providers always check your job stability before approving your loan. They expect you to have a minimum of six months stability in your current job with a minimum of 1 - 2 years’ work experience. All these need to be submitted alongside with your residential address.

4. Low-Income

In order for your credit card or loan application to be approved, you must be able to meet the lenders minimum income requirements. Each lender may have a different minimum income in order to approve your application. Generally, an income of $800 - $1,000 per month is the minimum

5. Having Excessive Debt or High debt-to-income (DTI) ratio

Your current debt plays a vital role in getting your loan or Credit Card application approved. The Consumer Financial Protection Bureau (CFPB) advises that your debt should not be more than 43% of your income. You can calculate your DTI ratio by dividing your monthly loan and credit card payments by your monthly income.

6. Application Errors

Complete your loan applications carefully. Make sure all fields are properly completed. A single error can cause your application to be declined

Be sure to consider all of the points mentioned above during your next loan application. Keeping these in mind, and maintaining a healthy DTI will only help you get approved on your next application


1. https://www.lendingtree.com/personal/what-are-personal-loans-used-for/
2. https://www.myfico.com/credit-education/whats-in-your-credit-score/
3. https://www.thebalance.com/how-your-credit-score-influences-your-interest-rate-960278
4. https://www.gobankingrates.com/credit/credit-report/read-credit-report/
5. https://www.finder.com/new-employee-personal-loans

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