New Delhi. Often people think that if they have a good CIBIL Score or Credit Score then they will get a loan or credit card easily. Suppose your score is 780, you happily apply for a personal loan, but you get a rejection message from the bank. It’s surprising, isn’t it? Actually, high score only opens the door, banks check many more things for loan approval.
1. Stable Income
Stable income plays the biggest role. Banks see how stable your job is. Changing jobs frequently, just joining a new job or having a gap in employment is considered a risk by the bank. Most banks want that you should be working continuously in the same sector for at least 2–3 years. If you are self-employed, the scrutiny becomes more stringent. Banks closely look at your business’s income, tax returns and previous years’ performance. Even small degradation can weaken the application.
2. Current Liabilities
The second big factor is your current liabilities. If 40–50 percent of your income is already going towards EMIs, then banks hesitate in giving a new loan. Therefore, it is better to close small loans and keep the credit card bills clean.
3. Applying too much
The third important reason is to apply more. If you have applied for many loans or credit cards in a short period of time, a hard inquiry is made every time. This signals to the bank that you are desperate for credit.
4. Old record
The last and hidden reason is your old record. It is possible that you may have had a dispute, late EMI or loan settlement with a bank in the past. Even if your CIBIL score is better now, the bank’s internal record may stop your application.
What to do?
Be stable in job, keep liabilities low, do not apply again and again and maintain clean records with every bank. Credit score opens doors, but approval determines your financial habits.
