Factors That Matter Beyond CIBIL Score


When your loan application is rejected, it could also an opportunity to improve your credit behaviour, writes SHIV NANDA

If you have put in a lot of effort and time to maintain a good credit score, it’s natural to expect that banks will readily approve your loan application and offer you low-interest rates. However, sometimes, despite having a good credit score, your loan application may get rejected. This can be confusing because you may have learned that your credit score is a crucial factor in determining whether a lender will approve your loan.

It’s important to note that your credit score is not the only factor lenders consider when approving a loan. There are several other reasons involved in the lending process that could impact the outcome of your loan application.

In this blog, we will delve into the various reasons that may cause your loan application to be denied, despite having a solid credit score.

1. Frequent Borrower

If you are in the habit of regularly borrowing money, it can make lenders question your ability to repay the loan. Even if you have a history of making timely payments on multiple loans and credit accounts, lenders may be hesitant to approve a new loan for you because they may believe that taking on more credit will make it difficult for you to make payments on time. This can make you a risky borrower in the eyes of lenders, and they may be hesitant to offer you a new loan.

2. Comments on your CIBIL Report

The remarks or comments in a credit report, such as a CIBIL report, can also play a role in a loan application being denied. These comments can include things like making payments past the due date, asking for a lower interest rate, etc. These comments demonstrate the applicant’s irresponsible behaviour or poor repayment habits, and they can affect the lender’s decision.

3. Instability in Career or Company etc.

A loan application can be denied if the applicant’s income or employment is not stable or if their employer is on a list of organizations that are considered risky by the bank. Additionally, frequently changing your job or work address can also negatively impact your credit report, making it harder to get approved for a loan.

This is because lenders and financial institutions view instability in employment or income as a risk, and they may be cautious about approving a loan for someone with an unstable financial situation.

4. Your Information Matches with Defaulter Details

A credit report includes various personal information about the borrower, such as their date of birth, PAN number, address, age, gender, employment status, etc. If any of this information matches that of a person who has defaulted on a loan in the past, it can increase the chances of a loan application being rejected, even if the borrower has a good credit score. This is because the lender may consider the borrower to be high-risk if they share the same information as a defaulter.

5. Irregular Tax Paying History

Failing to pay taxes on time can also be a reason for a loan application to be denied. If a person has a history of not submitting their income tax returns on time in recent years, it is more likely that the lender will reject their loan application. This is because lenders view a person who does not pay their taxes as a higher risk and may be hesitant to approve a loan for them. Please check: tax benefits on personal loan.

6. Loan Rejections in the Past

If a person has applied for a loan and been rejected in the past, that information is recorded by CIBIL and stays with the original lender. If the person then applies for a new loan, the new lender can see that previous rejection on the borrower’s credit report. Even if the borrower has since improved their credit and has a good CIBIL score, the previous rejection can still negatively impact their chances of getting the new loan.

7. Your Co-Applicant Has a Poor CIBIL History

When applying for a loan with another person, the lender will also look at the co-applicants credit history as recorded by CIBIL. If the co-applicant has a poor CIBIL score, it may negatively affect the chances of the loan being approved. It is a good idea to check the co-applicants credit history before submitting a loan application to avoid potential rejection.

8. Too Many Unsecured Loans

Having a good credit score is important, and one way to maintain a good score is by balancing secured and unsecured loans. A secured loan is one where you put up collateral, such as a house or car, while an unsecured loan doesn’t require collateral.

If you have too many unsecured loans and not enough secured loans, lenders may see you as someone who is heavily in debt and may reject your loan application. It’s important to have a balance of both types of loans to show lenders that you can handle different types of credit responsibly.

9. Inability to Verify the Information You Have Provided 

When applying for a loan, it is important to make sure all your information is accurate and verifiable. If the bank or financial institution is unable to confirm your information, such as your income, address, or employment, it may lead to the rejection of your loan application. In order to increase the chances of your loan being approved, make sure to provide accurate and up-to-date information and necessary documents for verification.


When your loan application is rejected, it may be disappointing, but it’s important to remember that it’s also an opportunity to improve your credit behaviour. Lenders will typically explain why your application was denied. Take advantage of that information and use it to identify the areas where you need to improve. By working on those areas, you can increase your chances of being approved for a loan in the future. And reapply for a loan again with confidence.

The Author:

Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, and personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at shiv@freopay.com