A credit score of 700 or above may sound like a green signal for personal loan approval. But the truth is, that’s not always enough. Banks and non-banking financial companies (NBFCs) look at far more than just your score. They have several other filters that determine whether your loan application makes the cut. So even if your score is decent, there’s a chance your application might still be turned down.
One major reason for rejection is a high debt-to-income (DTI) ratio. This ratio shows how much of your monthly income is used to pay existing debts. Let’s say your salary is ₹50,000 and your total EMIs come to ₹20,000 — that’s a DTI of 40%. The lower the ratio, the better your chances of approval.
Most banks prefer a DTI of 35% or below. Some are flexible up to 40–45%, but anything beyond that can make lenders nervous. A DTI above 45% means the bank sees you as financially stretched. In such cases, you may be asked to add a co-applicant or guarantor, or the loan might simply be rejected.
If you’re planning to apply for a loan, check your DTI first. Remember to include the EMI of the loan you’re applying for. If your ratio is on the higher side, try to bring it down before submitting the application.
Your monthly income isn’t just about what you earn — it’s what tells the bank how comfortably you can repay. Most lenders have a clear income threshold that varies based on your profession and employer type.
For instance, the State Bank of India (SBI) requires a minimum monthly salary of ₹20,000 for government and defence employees, and ₹25,000 for corporate employees. Kotak Bank’s criteria are slightly different: ₹20,000 for its own staff, ₹25,000 for those with salary accounts in Kotak, and ₹30,000 for those banking elsewhere.
So before applying, check the minimum income requirement on the lender’s website. It saves you from unnecessary paperwork and rejection later.
Your job history says a lot about your financial reliability. Frequent job changes or short stints in the current company can raise red flags for lenders.
Most banks insist on a minimum period of service — both overall and with your present employer. HDFC Bank, for example, asks for at least two years of total work experience, including one year with the current employer. SBI requires six months of service for government and defence employees, and one year for those in the corporate sector.
If you haven’t been in your current role long enough, it might be better to wait a few months before applying.
Banks also look at your age to assess repayment ability across the loan tenure. There’s a lower and upper limit — for salaried individuals, it’s often between 20 and 58 years; for self-employed professionals, 23 to 65 years. ICICI Bank and HSBC both follow similar ranges. Falling outside this bracket could mean a straight rejection, even with a solid credit score.
Having a credit score doesn’t always mean the bank has enough data to evaluate you properly. If your credit history is only a few months old, lenders might ask you to reapply later. They prefer applicants with a credit record of at least a year or more.
Some lenders insist that applicants must already have an account with them — either a savings or salary account. For instance, HSBC requires customers to hold an account for at least three months before applying for a loan, while SBI mandates a salary package account for corporate applicants.
A few lenders even check for your education level. Kotak Bank specifies that applicants must hold at least a diploma or graduation. Others may look into how long you’ve lived at your current address. Airtel, for instance, expects tenants to have stayed at their rented home for at least a year.
A good credit score may open the door, but it doesn’t guarantee a personal loan. Banks and NBFCs consider a mix of factors — your income, DTI ratio, job history, age, and even your relationship with the bank. It’s not about just being eligible on paper; it’s about proving financial stability from every angle.
Before applying, take a moment to check all these parameters. A little preparation can save you from a frustrating “loan rejected” message later.
