When you apply for a personal loan, the potential lender only approves the loan after scrutinizing your personal loan eligibility and creditworthiness. Some of the factors that lenders take into consideration are:
- Your income
- How much disposable income you have after paying off your dues and expenses
- Your credit score
- Your past credit behaviour
If your credit profile doesn’t meet the lender’s expectations, your loan application is likely to be denied, or you may be approved for a loan at a higher interest rate, or you may be sanctioned for a lower loan amount.
The handy tips listed below can help you improve your personal loan eligibility and increase your chances of getting a loan approved at the best interest rate.
1. Improve your credit score
Credit score/CIBIL score is one of the primary determining factors that lenders consider to evaluate your creditworthiness. A CIBIL score of 750 or more is considered ideal for getting a loan approved at favourable loan terms. If you have a low credit score, you should not apply for any kind of credit; rather, you should take measures to improve your credit score to increase your personal loan eligibility. Follow these tips to improve your credit score:
- Maintain a credit utilisation ratio of below 30%.
- Have a balanced credit mix.
- Make timely payments. Set up automatic payments or reminders.
- Rectify errors in your credit report
- Consolidate your debts
2. Include all your sources of income
Your income is one of the important eligibility criteria for a personal loan. The lender assesses your repayment ability on the basis of your monthly income. While applying for a personal loan, ensure that you show all the income sources and not just your salary. This assures the lender that you have the required resources to make timely payments towards your loan.
3. Check affordability
Before applying for a personal loan, it is always better to check whether you can afford the loan. Use the online personal loan EMI calculator to understand how the interest rate, loan amount, and loan tenure impacts your EMIs. By using the calculator, you will have a fair idea of whether you can afford the loan or not. Moreover, depending on your financial standing, you can choose the loan tenure that will help you pay your EMIs comfortably. A long loan tenure will reduce your EMI amount but increase the amount of interest you will be paying towards your loan. On the other hand, a short loan tenure will increase your EMI amount, but the interest component you’ll paying is comparatively lower.
4. Apply for a loan with a co-applicant
If your credit score is low, you are less likely to get loan approval. However, you can increase your loan approval chances by applying for it with a co-applicant who has a good credit score. While the co-applicant can increase the possibility of you getting a personal loan, he/she is equally responsible for the timely repayments.
5. Apply at a fintech lending platform with easy to meet eligibility criteria
New-age fintech companies such as MoneyTap makes the process of borrowing much easier with its easy to meet eligibility criteria. For instance, MoneyTap’s eligibility criteria are as follows:
- You should be employed by a public or a private company or should be self-employed with a minimum turnover as per the lending company’s policies.
- You must be between 21 to 60 years of age.
- You should earn a minimum salary of ₹20,000 every month.
- You should have work experience of a minimum of 1 year and should have worked for a minimum of 6 months in the current organization.
Apply for a personal loan with a fintech company and increase your chances of getting personal loan approval.
Applying for a personal loan is a big financial decision. By using the above tips to improve your personal loan eligibility, you are making sure that your loan application is as flawless as possible. And that’s a good start to finding a personal loan that works for you.