Shocked by a loan rejection despite a 700+ credit score? Here’s what’s going on

Core Insights - A decent credit score alone does not guarantee approval for personal loans, as banks consider multiple eligibility criteria [1][21]. Eligibility Criteria - Credit Score: While a credit score of 700 or higher is often required, it is just one of several factors [2][21]. - Debt-to-Income (DTI) Ratio: The DTI ratio is crucial, measuring the percentage of monthly income used for debt servicing. A DTI ratio of 35% or lower is generally considered favorable for loan approval [4][5]. Ratios above 45% significantly decrease approval chances [6]. - Minimum Monthly Income: Banks set specific minimum income requirements based on employment type. For instance, SBI requires a minimum net monthly salary of Rs. 20,000 for Government employees and Rs. 25,000 for corporate employees [9][10]. - Employment Stability: Job stability is essential, with many banks requiring a minimum tenure in the current job. For example, HDFC Bank mandates at least 2 years of overall job experience, including 1 year with the current employer [12][13]. - Age Requirements: Banks have age criteria for applicants, often specifying a minimum and maximum age for loan eligibility. For instance, ICICI Bank requires salaried individuals to be between 20 and 58 years old [16][17]. - Credit History: A short credit history may lead to application rejection, as banks may require more data for proper assessment [18]. - Other Requirements: Additional criteria may include having an account with the bank, minimum educational qualifications, and a specified stay period in rented accommodation [19][20][21]. Conclusion - Banks evaluate a combination of these criteria to determine overall eligibility for personal loans, emphasizing that a good credit score is insufficient on its own for approval [22].