Is your Credit Score >750?
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A good credit score alone does not mean a person will get the loan he wants. Lenders additionally look at the status of previous loans and the repayment 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 one's credit score.
A good credit score is necessary for successful processing of your loan or credit card application. It shows potential lenders that you are a reliable customer. But it does not necessarily mean that you are loan eligible. There are a few factors which might affect your credit card or loan application, despite having a good credit score.
The major reasons why your loan gets rejected even if you have a good credit score are:
- Imbalance between income and expenditure: When you are requesting to borrow, your income matters a lot, because you must generally show some sort of ability to repay. So, the more your loan amount requirement, the more your income requirement. Even if you have a good credit score, your repayment capacity will be taken into account, and hence, having a good income becomes a vital factor.
- Having too much of debt: Having too much of debt can negatively affect your credit worthiness, especially if you are applying for a mortgage. In this case, lenders look for existing debt obligations and they subtract it from your income. Having a high debt-income ratio might get your application rejected.
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