Tips to Keep in Mind Before Reapplying After a Personal Loan Rejection


When you apply for a personal loan, a lender looks at multiple different factors before granting you the funds. Your financial records, monthly incomes, FOIR, CIBIL score etc. determine whether you are eligible for a hassle-free personal loan or not. Also, it is important to be able to avail the finances at the first attempt.

Personal Loan

However, at times you might have to reapply if your loan application does not clear for certain reasons. It is important that you are more careful second time out, and make sure you fulfil all personal loan eligibility criteria before you apply for funds. That will decrease your loan rejection chances and will help you determine the reasons that lead to the denial the first time. Let’s discuss a few things that you should keep in mind before reapplying after a personal loan rejection.

  1. Find out why your application was rejected – It is important you find out why it got rejected the first time before applying for advances again. The two most common reasons for denial are either low income or a poor CIBIL score. Even missing on one important document can result into an application denial.
  1. Check your CIBIL rating – One of the most common factors for application rejection is poor CIBIL rating. Personal loans ask for a rating of 750 or better. You can get credit if your score is lower than that, but your chances of approval reduce a lot.

You can check your credit rating from the CIBIL website. Head over to the website, provide the necessary details and make the payment to get your CIBIL rating. Make sure to check the report to see whether it is updated, and contains no errors.

  1. Improve your CIBIL rating – If you find that your CIBIL rating is reducing the chances of availing a low interest rate personal loan, then you can take some easy steps to improve it.

Start repaying all your dues in time. Make sure all your credit card and amenities bills are also paid on time. If you have any existing debt, try repaying it. Proving yourself responsible with finances will improve your CIBIL rating.

  1. Improve your FOIR – FOIR or Fixed Obligation to Income Ratio is a parameter that financial institutions use to determine your creditworthiness. A lender takes into account your other obligations (such as EMIs) and compares that against your monthly income. If it is already 50% of your monthly income, you will be denied any more credit.

Ideally, your FOIR should be around 30%. If it’s not, you should repay your existing loans and then apply for another advance. Also, you can use a Personal Loan EMI calculator to determine your EMIs so that you do not cross that 30% threshold.

  1. Make sure you wait before applying again – Do not apply immediately again if you have denied a personal loan. A lender will request for your CIBIL rating every time you apply for credit. That will be noted as an enquiry in your credit report. If you have too many enquiries in too little time, it will hamper your chances of financing.

Ideally, the number of enquiries should not exceed the number of loans you have. Multiple queries indicate that lenders have denied your application in the recent past. It also affects your CIBIL rating. That’s why experts suggest re-applying for a personal loan after at least 6 months.

Do not let a personal loan rejection disappoint you. Do your research, plan your finances accordingly, fix what issues you faced, and apply again. You will be sure to succeed.