The Truth About Loan Rejections: Why a Good Credit Score Isn't Enough

Life is full of amazing possibilities—that dream vacation, starting your own business, or finally buying your perfect home. Thanks to a wide range of loan options from banks and NBFCs, these can feel within reach.

We all know a good credit score is important for borrowing, but have you ever been surprised by a loan rejection even with a decent credit score? The truth is, there's more to the story. A lender can reject your loan application based on various internal credit norms.

Let's understand what happens behind the scenes of loan approvals, exploring what lenders consider, and how you can improve your chances of approval.

What is a Credit Score, and How to Check a Credit Score?

Your credit score or report is like a financial report card, summarising your history of borrowing and repayment. It's typically a three-digit number calculated based on information in your credit report, which lenders use to check your creditworthiness. So, why is this score important?

A good credit score indicates responsible borrower behaviour, potentially qualifying you for better loan terms, like lower interest rates and higher loan amounts. This can save funds in the long run and make financing your goals, like a new car or a home renovation, more affordable.

To check your credit score online, you can simply visit the lender's website and download your credit report.

Beyond the Credit Score: Why Your Loan Application Might Get Stalled

You have a good credit score – that's fantastic! But even with a strong score, your loan application might get put on hold. Let's explore some lesser-known reasons why this can happen: