Santosh Agarwal, CEO of Paisabazaar.com, said that a credit score is not the sole factor banks use to determine loan approvals.
This guidance highlights a common misconception among borrowers who believe a high score guarantees funding. Understanding the broader criteria used by financial institutions can prevent applicants from facing unexpected rejections during the borrowing process.
In a video interview, Agarwal said that banks look beyond the numerical score to assess a borrower's overall financial health. He introduced a "not-to-do" checklist for applicants to avoid pitfalls that could trigger a denial from lenders.
One primary concern for banks is what Agarwal described as "hungry credit behaviour." This occurs when an applicant applies for multiple loans or credit lines in a short period, signaling to the lender that the borrower is desperate for funds.
Agarwal said that banks may deny a loan on the grounds of "hungry credit behaviour." Such patterns can suggest a lack of financial stability, or an inability to manage existing debts, factors that may outweigh a positive credit score.
By educating consumers on these behaviors, the CEO aims to help applicants present a more stable financial profile. The goal is to ensure that borrowers do not inadvertently sabotage their chances of approval by appearing over-leveraged to the bank's risk assessment tools.
Agarwal said, "Credit score is not the only factor deciding loans."
“"Credit score is not the only factor deciding loans."”
This shift in focus suggests that lenders are increasingly prioritizing behavioral patterns and stability over static metrics. For consumers, it means that the timing and frequency of loan applications are just as critical as the credit score itself, as aggressive borrowing patterns can be interpreted as a red flag for default risk.
