What adds insult to injury is when the banks act vague when you try to know the reason behind your application being turned to trash.
An obvious reason to their non communicative behavior on this aspect is privacy. They do not want to reveal their business strategies to their competitors and would avoid the bank's loan criteria becoming public information.
General Criteria of Banks
Even though the detailed rules of the bank's criteria for lending money are the part of their dearly held secret, there are some general rules which can help you understand better the fabrication of their screening methods.
The banks will lend money to those who:
Has a balanced and durable work history
If you had your loan application rejected then most probably it was due to the above mentioned reason.
Banks have a habit of making predictions about your behavior in terms of the financial setup that they have, in order to decide as to where you stand. They do this by doing an extensive research into some previous applicant's behavior history. This way they can forecast your behavior.
They put you in one of the two categories, under the good category, you will repay their money on time and bring them healthy profits. Under the bad category, you will cost them money.
Every bank has their own group of mathematicians who devise unique formulas to screen an individual and his finances. They consider your living expenses and do not let the repayment installment rise above a certain level of your salary.
But this does not apply to online services. You can study the information on the site for a loan in any situation.
If the repayment installment is above a certain level of your current salary, then your loan application will be immediately denied. Some banks even account for an increased percentage of interest cost to provide a stronger hedging.
If you are already in debt and their payments are taking away a substantial amount of your salary then this can also create problem.
Stability is one the major concerns of the banks. If you are one of those people who frequently switch jobs or keep changing industries then this behavior might question your reliability. Moreover most banks will not offer loan to someone who is serving under his probation period.
Credit History Matters
All the lenders check the credit reports before giving loan. It contains your personal information and particulars of your credit history.
These details include:
Previous loan applications of last five years Present and old employers
The default or the overdue accounts can be quite troublesome regardless of the size of their amount. Some banks will refuse your loan application straight away no matter how small your overdue account is. Even the long forgotten overdue phone accounts (defaulted because you moved from that place) can create trouble for you.