Banks and financial institutions in Saudi Arabia operate under strict lending regulations set by the Saudi Central Bank (SAMA). While rejection criteria can vary slightly between banks, the vast majority of declined applications stem from specific regulatory limits, credit history issues, or employment status.
The following factors are the primary reasons why personal finance applications are rejected.
Exceeding the Debt Burden Ratio (DBR)
The most common technical reason for rejection is the Debt Burden Ratio. SAMA regulations limit the percentage of a borrower's monthly salary that can be used to repay debt.
The 33% Rule: For most employees, total monthly debt repayments (including the new loan, credit cards, and car installments) cannot exceed 33% of their monthly salary.
Retirees: The limit is typically stricter for retirees, often capped at 25% of their monthly pension.
Impact: If an applicant’s existing obligations already place them near this limit, any new loan application is automatically declined, regardless of their credit score or income level.
Negative Credit History (SIMAH)
All authorized lenders in Saudi Arabia check the applicant's credit record through the Saudi Credit Bureau (SIMAH). A poor record here is a definitive block.
Defaults: Any record of a defaulted loan or unpaid credit card balance will cause rejection.
Late Payments: A history of frequent late payments lowers the credit score (Simah Score), signaling high risk to the lender.
Telecom Bills: Unpaid bills from telecommunications companies (STC, Mobily, Zain) are reported to SIMAH. Outstanding dues on a mobile or internet contract often result in loan denial until the amount is cleared.
Employment Status and Employer Approval
Banks in Saudi Arabia categorize employers based on stability and creditworthiness. Working for a legitimate company is not always sufficient for a loan.
Unapproved Employers: Banks maintain an internal "Approved Employer List." If an applicant works for a start-up, a small private establishment, or a company that is not on this list, they are often ineligible for personal financing.
Lack of Salary Transfer: Many banks require the borrower’s salary to be directly transferred to them. If the employer does not have an agreement to transfer salaries to that specific bank, or if they refuse to provide a salary transfer commitment, the application may be rejected.
Insufficient Tenure:
Saudi Nationals: Rejection often occurs if the applicant has been in their current job for less than 3 months (or 1 month for government sectors).
Expatriates: Most banks require at least 12 months of continuous service with the current employer. Applications submitted before this tenure is complete are routinely declined.
Residency and Iqama Validity (For Expatriates)
For non-Saudi residents, the loan term is strictly tied to their legal status in the Kingdom.
Short Iqama Validity: If the applicant's residence permit (Iqama) is close to expiring, banks may reject the loan because they cannot guarantee the borrower will remain in the country long enough to repay it.
Contract Duration: The loan tenure cannot exceed the remaining duration of the employment contract. If a worker has only 10 months left on their contract, they cannot be approved for a 5-year loan.
Salary and Age Thresholds
Even with a clean credit record, falling outside the basic demographic brackets leads to immediate disqualification.
Minimum Salary: Applicants earning below the bank's minimum threshold (typically SAR 3,000–4,000 for Saudis and SAR 5,000–7,000 for expats) will be rejected.
Age Limits:
Too Young: Applicants under 18 (or 21 for some banks/expats) are ineligible.
Nearing Retirement: If the loan term extends beyond the borrower’s retirement age (usually 60 for employees), the system will reject the tenure. The loan must be fully repaid before this age is reached.
Administrative and Documentation Issues
Inconsistent Data: Discrepancies between the salary stated on the application and the amount deposited in the bank account (e.g., due to variable overtime or allowances not considered "basic salary") can trigger a rejection.
Guarantor Requirements: In some borderline cases, a bank may request a guarantor. Failure to provide a qualified guarantor results in the closure of the application.
