Six Reasons Your Home Loan Could Be Rejected

Six Reasons Your Home Loan Could Be Rejected

Applying for a home loan? Here are some key things which you need to keep in mind in order to ensure your loan application is not rejected by the bank or any financial institution.

Lenders consider many factors before granting any loan. The criteria to determine the eligibility and quantum of a loan differs from one lender to another. Improving your credit score, ensuring timely payment of credit card dues, closing all earlier loans and increasing one’s income levels are more common. However, there are certain other indirect reasons which could be causal for the rejection of the loan. Here are few reasons for loan rejection which normally people may not be aware about:

Frequently switching jobs

Banks stress a lot on job stability and certain banks have even made it mandatory that the applicant needs to be employed with a particular company for three or more years to be eligible to get a loan. The banks may also take into consideration the stability of the company one is working for while processing a loan application. So, it is highly advisable that the applicant stick to a particular job for a minimum period of a year to get the loan sanctioned.

Residential address on the defaulter list

If the applicant bears the same address as someone who has been a defaulter for either loan repayment or credit card dues and which has been reported to CIBIL, chances of loan rejection increases. Banks often have negative PIN codes based upon historical delinquency experience, where they may not lend. This is because the residential address will match with a disproportionate number who are on the defaulter’s list.

Profile doesn’t fit into the bank’s internal policy

Internal policies for some banks may dictate that some geographic area or credit profiles are negative for lending and the bank won’t be able to sanction loans. In such case, one need to discuss it with the bank and provide other security in the form of a guarantor or in the form of insurance policies, collateral securities, fixed deposits, etc. in order to assure the banker about their repayment ability.

Banks do not fund for old building

A bank will not fund old buildings especially if the building is more than 20 year old. The criteria of the age of the building vary from one bank to another. But, the land value will always be considered by the bank. One can negotiate for a lesser loan amount by adding in some form of security and one can also increase the down payment to get the loan sanctioned.

Loan application has been rejected before

Every bank has records of the entire rejected loan applications in their database or can obtain a history of loan application enquiries from CIBIL. When the applicant applies to a bank, the rejection will show up in the credit profile check and this would probably affect the credit worthiness of the applicant. It is highly advisable that one should not keep on applying for loans without any reason.

Poor Credit Score or Credit History

The credit score ranges from 300 to 900. The closer you are to 900, the more confidence the credit institution will have in your ability to repay the loan and hence, the better the chances of your application getting approved. Anything above 750 is considered a good credit score. All banks usually look at the credit score as one of the many checks they do before advancing a loan.
A good score alone does not mean a person can get the loan he wants. Bankers additionally look at the status of previous loans and the payment history on such loans. A previously settled or a written off loan is likely to impair the ability to avail more loans. Credit history, outstanding loan value, loan types, recent credit events, etc. affect ones credit score.

Add a Comment

Thanks for your comment. Your comments will be posted on admin approval.

Comments (0)
Check your Free Credit Score Online

As part of our efforts to make the end consumer services affordable and available at price points which are favourable to the customer, CreditMantri may receive fees / commissions from lenders.

CreditMantri ™ is a registered trademark of CreditMantri Finserve Private Limited. All Rights Reserved. Product name, logo, brands, and other trademarks featured or referred to within Credit Mantri are the property of their respective trademark holders.

CreditMantri was created to help you take charge of your credit health and help you make better borrowing decisions. We support customers with every kind of credit profile - those who are new to credit and have a minimal or nonexistent record; those who have a problematic history; and those who already enjoy a healthy profile. If you are looking for credit, we will make sure you find it, and ensure that it is the best possible match for you. How do we help you? We enable you to obtain your credit score instantly, online, real time. We get your Credit Score online and provide a free Credit Health Analysis of your CIBIL or Equifax report. Based on the analysis, we help you discover loans and credit cards best suited for your credit profile. We help you understand your Credit Profile, Credit Information Report (CIR) and know where you stand. We are a one-stop shop for all your credit needs. We make it easy for you to browse through and compare the various financial products on offer on the market; access our free and user-friendly online tools; and finally, enjoy a stress-free application process with quick approvals. We ensure that you have a better shot at getting an approval for a loan or credit card you apply since we match the lender’s criteria to your credit profile. We help you avoid loan rejection by carefully determining your eligibility and matching you with the right lender/product. We achieve this with a cutting edge combination of data science and technology that ensures that both lenders and borrowers have a transparent common platform to make their decisions. We treat your data with the utmost confidentiality and will never share or sell it to anyone. That is our CreditMantri guarantee. Our dedicated and best-in-class customer service will go the extra mile (or two) to support you on every step of your credit journey. Our 1 Million happy customers are our best testimonial.

CreditMantri is India’s No. 1 site for Credit Analysis and Free Credit Score Online. Let us help you take control of your credit goals and unlock the door to your financial freedom.