Ways to Increase Your Personal Loan EligibilityMarch 15, 2021
A number of factors are taken into account before a loan is approved by a lender. Banks very often look into the sector that you are employed in, your income, credit score, existing loan, age group. These information help the lender access the repayment capacity of the borrowers.
Therefore, you can easily conclude that an applicant with a high credit score will be preferred over others. Lenders also prefer extending loans to employees of stable and well-known companies.
But to avoid facing rejection on your loan application, these are few steps that can be taken to increase your personal loan eligibility.
Clear Existing Dues
A lender did not consider an ongoing loan which is due to end in six month. But now even an equated monthly instalment (EMI) is looked into when an application is considered.
A parameter known as fixed obligation to income ratio (FOIR) is taken into account by lenders. Under this, an applicant’s fixed obligations such as an ongoing EMI is looked into to determine eligibility.
So if you have a few EMIs due to be paid you may want to repay them before applying for a new loan.
Check Credit Report
Public sector banks usually prefer lending to individuals with a credit score of 700 or higher. The comparable number for private banks is even higher. So keeping track of your credit score might be a good idea.
Personal loan eligibility also depends on your credit utilization. The way it is determined is this: For instance, you have a credit card with a Rs. 1 Lakh limit on monthly spend but your average spend is Rs. 40,000. In this case, your credit utilization is 40%.
However, if you have two cards with limits of Rs. 75,000 each, and you spend Rs. 40,000 monthly, your utilization is 27%. The lower your credit utilization the lower the risk and hence higher your personal loan eligibility.
Most lenders are comfortable with a credit utilization of close to 30%.
You must also know that your credit score can also fall if you seek a loan with a number of lenders at a time and especially if you have a short credit history.
Take a joint loan
In case you are seeking a home loan, one way to boost your chances of getting it is by applying for a joint loan. Some banks allow relatives such as father, mother, son, or daughter as co-applicant if they are working. A co-applicant could boost your loan eligibility.
Lender that is offering a step-up loan
Under this scheme, a bank offers a loan at a lower EMI, to begin with. Gradually as you begin to repay the loan, the EMI is increased. This works especially well for younger borrowers who steadily find their income moving higher and are able to pay a higher EMI later on.
However, it must be noted that the interest outgo in a step-up loan is higher than in a loan with a fixed EMI. Therefore you should use a step-up EMI only if you are sure of better earnings potential in the future.
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Aadhaar card loan
Having an Aadhar Card makes getting a personal loan a lot easier as Aadhaar Card gives you easy access to several financial services. The Aadhaar card loan applicants are asked to provide Know Your Customer (KYC) documents and Aadhaar Card is among the most concrete proof of your citizenship and identity. If you are looking to avail of a loan using an Aadhaar card you need not look further than Finserv MARKET where you can get instant approval on the basis of e-KYC.
Be it a trip to your dream destination, a wedding function or renovating your home, you can get an unsecured loan by applying for a personal loan. At Finserv MARKETS you can avail a personal loan of 10% p.a. Onwards. The processing fee is as low as 0.5% to 2.50% of the personal loan amount.
Therefore, personal loan eligibility can be boosted if you take certain measures to discipline the way you manage your finances. Monitoring your CIBIL score may hugely improve your loan repayment capability and hence your personal loan eligibility.