Even if you pay your bills on time, expert says lenders can check these financial red flags

When people think about getting a loan, they often believe it all comes down to credit scores or income figures. But according to Amit Bansal, Founder of BharatLoan, lenders consider far more subtle factors that can make or break your application, sometimes in ways borrowers least expect.

“One of the biggest signals lenders watch is credit utilisation,” explains Bansal. “Even if you pay your bills on time, maxing out your credit cards regularly can set off alarm bells. Ideally, we look for utilisation rates below 30%.”

Another factor flying under most people’s radar is repayment behaviour on small or informal credit, like buy-now-pay-later (BNPL) services or short-term loans. “These are low-stakes credits, but how responsibly you repay them gives us insight into your money habits,” says Bansal.

Income stability also weighs heavily. It’s not just about how much you earn but how predictably that money comes in. “Frequent job changes or irregular salary credits can raise questions, especially if someone is early in their career,” he adds.

Something even fewer borrowers consider is geography. “Certain PIN codes statistically show higher default rates. Living in such an area doesn’t automatically disqualify you, but it means your application might face tighter scrutiny,” Bansal notes.

Finally, there’s the debt-to-income (DTI) ratio. “Even with a stellar credit score, if too much of your salary is already tied up in EMIs, lenders hesitate to add more burden,” says Bansal.

“Loan approvals today aren’t just about numbers—they’re about your entire financial story,” he emphasises. “It’s about how you manage what you have and whether your habits reflect long-term financial responsibility.”

While understanding loan approval factors is crucial, emergencies present another financial dilemma: should you dip into your savings or turn to instant credit?

Vikkas Goyal, Founder of Rupee112, says it’s not an either-or scenario. “An emergency fund is your financial first-aid kit, ideally covering 3–6 months of essential expenses. It provides freedom and peace of mind. But building such a reserve takes time, especially for young professionals or middle-income families.”

This is where instant personal loans can bridge the gap. “Today’s digital platforms allow salaried individuals to access funds quickly and transparently. A well-structured loan can help manage urgent needs without depleting long-term investments or retirement savings,” explains Goyal.

“The smartest financial strategy,” Goyal says, “is one where both tools coexist. Emergency funds give you security; credit provides flexibility. Being financially prepared isn’t just about saving—it’s also about knowing how to borrow wisely when needed.”

In short, whether it’s getting loan approval or facing unexpected expenses, the key lies in knowing the deeper financial signals lenders watch and building a balanced system that lets you navigate both opportunities and emergencies with confidence.