There could be a number of reasons as to why personal loan application gets rejected by the ICICI Bank. But, not many understand these reasons. Lending institutions are cautious when evaluating a loan application. In case the applicant does not meet the eligibility criteria, then the loan is usually rejected. As a personal loan is an unsecured loan, where the bank does not demand security or guarantor, the lenders will not risk their money onto an unreliable applicant, whose financial position is not strong.
So, if the ICICI bank turns down a personal loan application, following are the causes that could have been responsible for the rejection.
- Weak Credit Score
By reviewing your repayment history, the financial institution judges your financial behaviour. If you default on payment of EMIs and credit card bills, then it guarantees negative remarks on your credit report. A poor track record of repayments can lower your credit score and dissuade the bank from providing you a loan. Your CIBIL score must be at least 700+ to get a personal loan approved. Thus, you should not miss or delay any credit payments.
- Unstable Employment
For salaried individuals, ICICI bank may ask for a minimum 2 years work experience. You should be employed with the current employer for at least a year. If you switch jobs often, like every six months, then the bank cannot rely on your job stability. If you are self-employed, then you will need 2 to 3 years of work experience to get the loan approved.
- Too Many Loan Applications/Rejections
Each personal loan application and rejection is recorded in your credit report. When you apply for a loan, the bank approaches the credit bureau for your credit report. The credit bureau considers this as a hard inquiry. Thus, more number of applications means greater number of hard inquiries, which will bring your credit score, down. It may even depict that you are too desperate for funds, and may put a dent on your eligibility profile.
- Lower Income Than Required
If you do not meet the monthly income criteria, then you should not apply for the loan. If the income is insufficient to accommodate the EMIs, then chances of getting a personal loan from ICICI are low. Minimum income requirement can differ from a loan scheme to another. Usually for a personal loan, minimum monthly salary that a person must draw is Rs. 25, 000. Check the loan type and income criteria of the same before applying for the funds.
- Too Many Ongoing Loans
If you are knee-deep into debt, then it is possible that the bank rejects your loan application. It is because holding several loans will count you as a risky borrower. Your debt to income ratio, if satisfactory may not stop the bank from giving you the loan. In case the debt to income ratio signifies that you are too dependent on loans and the remaining income is not enough to take out a new loan, the application could be rejected.
While the above-mentioned reasons for rejection of a personal loan application by ICICI bank holds true at many levels, it is the best to check with the bank personally and understand all their loan schemes. By doing so, you will know if you are an eligible candidate to take a personal loan from them, or not.