Things to Do if Your Personal Loan Application Gets Rejected | Personal Loan Stories - Kotak Mahindra Bank
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11 MARCH, 2020

Personal loans are favoured by the borrowers due to their easy availability. Banks or other lending organizations readily approve personal loan applications. However, there are cases when the application for a personal loan has been rejected due to several reasons. If you are one of such people whose personal loan application has been rejected, then you can do the following things to get approval on your personal loan application in the next try.

Examining the Credit Report

When it comes to applying for any type of loan, your credit report is one of the most critical tools used by lending institutions. Therefore you must thoroughly examine your credit report while applying for a loan. Now, after rejection, you need to examine the inaccuracies (if any) present in your credit report. Make sure that your credit report is clean while applying for a personal loan.


Understanding the reason behind the rejection

When lenders reject a loan request, they are required to send an adverse action notice which enlists the reason(s) behind the rejection. This notice mainly consists of the reasons for rejection like unsatisfactory credit score, faults in credit history, etc. and the name of the institute that provided this information to the lender. So, when you receive such notice, evaluate it carefully in order to get your loan application approved in the next attempt.


Improving Credit Score

Your credit report and credit score are two of the most important factors that influence the likelihood of getting the personal loan application approved. Therefore, if your loan application is rejected, improving the credit score increases your chances in the next attempt. To improve your credit score, you can do the following things,

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Clearing-off all old credit accounts

Any unpaid credit account reflects badly in your report. Therefore, clearing them on time is the best way to improve your credit score.

Being punctual while paying utility bills

Delayed payment reflects negatively in the credit report, and eventually reduce your credit score. So, you must not push your bill date while preparing to re-apply for a personal loan

Avoiding full utilization of credit card limit

Maxing out your credit card is a sign that your income sources are not sufficient, thus this habit reflects negatively on your credit score.  

Lastly, the loan inquiries you made in the past few months also affect negatively on your credit score. Therefore, if you are planning to apply for a personal loan, do not make other inquiries until you are fully prepared for it.

Signing up for credit monitoring

While working to improve your credit score, you must monitor your progress. For this, you can apply to get an annual free copy of your credit report from credit bureaus like CIBIL, Experian, etc.


In order to get your personal loan application approved after rejection, you need to gradually build your credit score and clear your credit report. If you be patient and adopt the above habits, it becomes much easier to avail a personal loan the next time you apply.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.