A personal loan is an unsecured loan; in case of emergency, when there is a sudden need for money, and you do not see the hope of getting help from anywhere, a personal loan can be taken. You will get the facility of personal loans in all banks. In most banks, the maximum period for repaying it is 5 years. But there are some reasons why your loan request can also get rejected. If you also plan to take a personal loan for any reason, then know about it here.
Credit Score
The first point is the credit score. The personal loan application can also be rejected if your credit score is poor. Even if you get a loan, it will be available with a very high-interest rate. Personal loan interest rates are already high, so if you get a loan with a higher interest rate, you will face many problems in repaying. The better the credit score, the easier to get a loan at better interest rates. A credit score of 750 or above is considered good.
Change Jobs Frequently
Your frequent job changes can also be a big reason. While giving a personal loan, banks also see the record of your job stability. If you are changing jobs again and again, then it is a sign of instability. Besides this, banks hesitate to give loans even if you have been unemployed for a long time. The bank finds it risky to provide loans in these cases. On the other hand, if you have been in a company for more than 1 or 2 years, your loan approval happens very quickly.
DTI Ratio
To check whether the borrower can repay the loan, the DTI ratio, i.e. debt to income ratio, is seen. For this, if you already have any existing loans, then by adding them, their sum is divided from your salary. The lower the DTI ratio, the easier to get the loan. Generally, a less than 36% ratio is considered good. If it is more, then there may be problems in the matter of loans.
Multiple Loan Applications At The Same Time
If you have applied for a loan at many places simultaneously, problems can arise. This affects your credit score. Whenever you apply for a loan or credit card in a bank, banks ask for your credit report from the credit bureau; this is called a hard inquiry. The credit score comes down a bit whenever there is a hard inquiry. Your credit report also contains the details of every hard inquiry done. This can have a wrong effect on your profile.
