Loan Rejection: Does it Hurt Your Credit Score? What You Need to Know

• A loan rejection itself does not directly reduce your credit score; lenders do not report rejections to credit bureaus.
• The credit inquiry (hard inquiry) made by the lender when you apply can slightly reduce your score, but this is usually small and temporary.
• Multiple hard inquiries in a short period, especially after a rejection, can signal 'credit hunger' and negatively impact your score.
• Rejections often stem from existing credit issues like high utilization or missed EMIs; the rejection reflects these underlying problems.
• After a rejection, review your credit report, improve credit utilization, pay EMIs on time, and avoid new credit before reapplying.