1.Income and DTI (Debt-to-Income Ratio)

Lenders analyse your income to determine whether you can comfortably handle monthly loan payments. Generally, a steady and sufficient income suggests financial reliability. However, they also consider your DTI ratio, which compares your total monthly debt obligations to your monthly income. A lower DTI ratio, ideally under 36%, indicates better financial health and a greater ability to repay new debt. For example, if you earn ₹50,000 monthly and have ₹10,000 in debt payments, your DTI ratio is 20%, which is favourable for loan approval.

2.Credit Score and History

Your credit score reflects your creditworthiness and is often a deciding factor in loan approval. Scores generally range from 300 to 850, with higher scores (typically above 750) considered low risk. Lenders look at your payment history, credit utilisation, and any past delinquencies to assess risk. Consistent on-time payments and a low balance relative to your credit limit can boost your score. If you have a low score, consider improving it before applying for a loan, as this can help secure better terms​.

3.Age 

While most lenders approve personal loans for individuals between the ages of 21 and 60, younger and older borrowers may face unique challenges. Younger applicants may need a co-signer, as they might lack a sufficient credit history. Older applicants close to retirement may find it harder to qualify, as lenders could be concerned about long-term income stability. Age-based considerations vary by lender, so understanding specific lender policies can help manage expectations.

4.Work Stability

Employment history significantly impacts your loan application, as stable jobs generally indicate reliable income. Lenders often prefer applicants who have been with their current employer for at least two years. Job stability suggests a consistent cash flow, lowering the lender’s perceived risk. Frequent job changes, however, may signal instability, which could negatively impact your application. Self-employed individuals may also need to provide additional documentation to prove consistent income.

5.Current Debts 

Existing debts, such as mortgages, car loans, or credit card balances, affect your ability to manage new financial obligations. Lenders review these commitments to ensure you won’t be overwhelmed by another loan. If you carry significant debt, it’s wise to reduce it before applying for a new loan. Paying down existing debts can improve your DTI ratio and show lenders that you’re capable of handling multiple financial responsibilities.