Even with a 780 credit score, your loan can get rejected. The real reason? Your FOIR is too high. Let’s break down the hidden metric that lenders are obsessed with — and how to fix it.
🧠 What is FOIR?
FOIR (Fixed Obligations to Income Ratio) is a financial ratio used by banks and NBFCs to assess whether you can handle a new loan.
It calculates how much of your monthly income is already tied up in EMIs and other fixed obligations.
📊 FOIR Formula:
iniCopyEditFOIR = (All monthly EMIs / Net monthly income) × 100
For example:
- Your income: ₹50,000/month
- Existing EMIs: ₹20,000
➡ FOIR = (20,000 / 50,000) × 100 = 40%
📉 Why FOIR Matters More Than Your Credit Score
Most people think a credit score is the only thing that matters. But banks check FOIR before even pulling your CIBIL.
If your FOIR is too high:
- 💥 Auto-rejection of loan, even with 800+ score
- ❌ Poor eligibility for credit cards
- 💸 Higher interest rate offers only
✅ Ideal FOIR for Different Loan Types
| Loan Type | Ideal FOIR Threshold |
|---|---|
| Personal Loan | Under 40% |
| Home Loan | Up to 50% is OK |
| Business Loan | Under 35% |
| Credit Cards | Under 30% |
Banks may accept higher FOIRs if your income is ₹1L+ or you’re a salaried govt employee — but lower is always safer.
📋 What Fixed Obligations Are Included in FOIR?
- All active loan EMIs
- Credit card minimum dues (some lenders consider 5% of outstanding)
- Car, bike, personal, gold loan EMIs
- Home loan EMIs
- EMI-based insurance or buy-now-pay-later plans (Flipkart/Amazon EMI)
❌ FOIR does NOT include rent, groceries, savings, or utilities — only fixed debts.
🛠 How to Reduce Your FOIR Before Applying
1. 🧾 Close small ongoing EMIs
Pay off quick loans to reduce the total EMI burden.
2. 💳 Limit credit card usage
Lower balances = lower assumed obligations in some banks’ FOIR logic.
3. 💰 Increase income sources
Freelancing, side income, or salary hike improves your FOIR instantly.
4. ⏳ Wait 3–6 months between loan applications
Lenders hate “credit hungry” profiles with stacked EMIs.
5. 🏦 Apply with a co-applicant
Split FOIR across multiple incomes (for home/personal loans).
✅ Tools You Should Use
Use any reliable FOIR calculator to simulate your eligibility.
Many banks (HDFC, ICICI, SBI) offer it for free on their websites.
It helps you:
- Know your approval chances before applying
- Choose loan amount smartly
- Avoid unnecessary rejections that hurt your CIBIL
🧾 Final Thoughts
Your credit score may open the door, but FOIR decides whether you’re allowed in. In 2025, with rising EMIs and more buy-now-pay-later schemes, FOIR is becoming the #1 risk metric for banks.
📉 High FOIR = high rejection risk
📈 Lower FOIR = smoother approvals, better deals
Before your next loan or credit card, make sure your FOIR is fit — not just your score.
