Applying for personal loans can be tricky. This is because the lenders set so many criteria that the borrower needs to fulfill to be eligible for the loan. The associated terms and conditions of these criteria may differ among the lenders but largely remain similar. Therefore, we bring you the top 7 tips that will help you improve your eligibility when you apply for a personal loan.
Tips To Improve Your Eligibility For Taking a Personal Loan:
- Work on your credit score
Credit score acts as a deciding factor for your loan eligibility. A credit score indicates how well you manage your debt. It is a culmination of past debt amounts, repayments amounts and periods. You are most likely to be approved for a loan from various banks and non-bank financiers if you have a credit score of 750 and above. You can improve your credit score by knowing your credit risk and managing it efficiently.
- Club together with all your income source
Loans are sanctioned to individuals who have the financial capability of paying them back. It is calculated using the total income of the individual. For example, if you earn Rs 15,000 from your full-time employment and get a cumulative rent of Rs 15,000 from your properties, you should include both when stating the monthly income to the financier. If you had a monthly income of Rs 15,000, chances are you would have gotten rejected when being evaluated for a personal loan, but if you include all sources, you are more likely to be approved for loans. This is especially important if stating just the one income source won’t help you cross the threshold of minimum income per month limit set by the financier.
- Don’t miss the credibility checking calls
Financiers also conduct credit checks to ensure there is no fraud being committed. This is also done to ensure that reaching out to you is easy, and the bank can send calls and reminders to you in case of any upcoming payment date. Checks on phone numbers, home address, employer address etc., is done. Make sure that the information that you are providing your financier is authentic and uniform among various documents. The chances of rejection become high if there is inconsistency in such information. This may also sometimes lead to downsizing of the loan amount.
- Avoid multiple loans at the same time
Taking multiple loans is not a good idea. This not only drives up your loan to income ratio but also sets you for high default risk. That, combined with a history of monthly instalments not being paid on time, will get your loan application rejected.
In addition to this, do not apply for multiple loans at the same time. This leads to all the lenders making numerous inquiries to the credit bureau. When applying for a personal loan, it’s better to compare lenders beforehand. You can do a personal loan eligibility check to be abreast of the eligibility criteria set by the financial institutions.
- Pay your credit card bills on time!
We can not stress this enough! Paying your credit bill on time is extremely important. The credit card activity is directly linked to your credit score. Missing deadlines directly affects your credit score and drags it down. If you cannot pay your credit card bill in full, make sure to pay at least the minimum amount to avoid it affecting your credit score.
- Apply for a joint loan
If you are looking for a personal loan, apply at reputed banks or NBFCs. Additionally, an excellent way to increase the loan amount eligibility is to apply for a joint personal loan if you have a working spouse. Your spouse’s income will increase the total household income, thus showing the lender a more excellent loan repayment capability.
- Check all documents before submitting
When submitting the documents for scrutiny, always make sure that the information is authentic and consistent. In the case of salaried borrowers, the lenders may ask for salary slips of the past 2-3 months and income tax returns. For self-employed borrowers, the current fiscal profit and loss statement, statement of the net worth of your assets may be asked by the lender. Inconsistencies and failure to produce all the required personal loan documents may make you ineligible for the loan.
In conclusion, it’s best to have a good credit score and all your documents in order before you apply for a personal loan. With these points in mind, you will improve your eligibility for taking a personal loan.
