To own something as expensive as a house or a car requires you to have a large sum of money. Those who can afford it will usually pay for everything upfront. On the other hand, most people go for loans. 

Lenders give loans as a financing option for applicants. Depending on the terms, you have a set number of years to repay the loan in full. Many people have no problem with the policies, but the unfortunate fact is that loan applications can get rejected.

A rejected loan is very disheartening because all of the hard work that went into the application can go down the drain. Regardless, the rejection should serve as a lesson to improve one’s financial situation and not an indication to give up trying.

In this article, we’ll be shedding light on the different issues that surround loan rejection. Read on below to learn more.

You Don’t Have a Steady Employment

Unstable employment is one of the leading reasons for loan rejection. For banks and lending institutions, having a stable job means that you can make monthly repayments without lapses. 

Some banks make employment a requirement, such as staying for at least one year in your current job or having two years of total work experience as part of the eligibility criteria. If you change jobs every six months or less than a year, the chances are likely that your loan will be rejected.

It is an even bigger problem for self-employed professionals or freelancers. The good news is that you’re in the clear as long as you present the relevant documents like your proof of income, income tax documents, and bank statements.

You Made the Wrong Bank Application

Many banks have different requirements to meet other approval criteria. They could be anything from not meeting the minimum age requirement, not being within the suitable income threshold, or the bank itself not offering financing options on properties in specific locations.

It’s recommended for you to apply to at least three different banks to find the best offer. Aside from that, you’ll also have a backup in case your application is rejected. However, you should also know that loan rejection can also be detrimental to your credit score because they are recorded. In turn, your future applications could undergo even more scrutiny.

You Relied on Developers Part of the Bank’s Blacklist 

There are times when loan rejection isn’t your fault but rather the property developer’s, which applies only to home loans. Like most financial institutions, even banks keep track of their blacklisted prospects. 

While you can’t do anything to prevent the situation, you can research the developer and their projects before placing an application. You can try looking for resources online or inquiring with the bank directly. A bank will cooperate with you if you’re already planning on applying to them.

You Have Too Many Loans

Banks can reject your loan application if they find out that you have too many monthly payments, such as credit card bills and other loans. They will know about it through your Central Credit Reference Information System (CCRIS) report, which affects your debt service ratio (DSR). 

Most banks have different DSR cut-off rates at 60 to 80 percent, but you still have to ensure that yours does not go over 60 percent of your net salary. If you go past that, your loan application will be rejected.

If you need the loan, consider taking a longer tenure to reduce the monthly payments. You can also talk with the bank that you’re applying for about how it calculates in total every month. That way, you can improve your DSR ratio.

You Don’t Have a Good Credit Score

A credit score is the basis of whether or not a lender will approve your loan. The higher your score, the greater possibility for you to receive an approval of your application.

A bank will use your CTOS and CCRIS reports to trace any late or overdue payments. Aside from that, they will also track whether you made minimum payments or full payments and your outstanding balance. If your credit score is low, it will lead to immediate rejection.

Your best course of action would be to not constantly rack up debt. Aside from that, you have to stop spending and pay your monthly dues on time. It will be hard to avoid buying things often, but it will be nothing but good for you.


If your loan gets rejected, it could be for a variety of reasons. It’s unfortunate, but you shouldn’t give up trying again. It’s vital to improve your financial situation, which can also help your application receive approval should you apply again in the future.

Home loans are one of the most applied-for loans due to the need for housing. NetLending has programs for home loans in Santa Ana at reasonable rates and homeowner-friendly terms. Contact us today to learn more!