Smart Ways to Boost Your Personal Loan Eligibility | Unity Bank
5 min read | 3 months ago
If you’ve taken out a substantial loan, perhaps for a home or a car, but now an unexpected need has come up – maybe it’s a medical emergency, an important family function or a unique opportunity you don’t want to miss. You need extra funds, but qualifying for another personal loan might be challenging when you’re already managing one. Fortunately, there are ways to make yourself eligible for that additional support. Here’s how you can increase your personal loan eligibility.
1. Check credit score before making an application
Your credit score acts like a financial report card, reflecting your reliability in repaying debt. Lenders look at it to decide if you’re a safe bet for a loan. By checking your score before applying, you can see if it’s good or needs improvement. If your score is high, it increases your chances of getting the loan and might even get you a better interest rate, saving you money.
2. Add a co-applicant
Applying with a co-applicant—such as a spouse or close family member—can increase your chances of loan approval. When you apply with someone who has a stable income and good credit, lenders feel more confident about approving the loan. This is because there are two people responsible for paying it back, which reduces the risk for the lender. This also improves the overall income considered by the lender, possibly resulting in better loan terms.
3. Avoid Multiple Loan Applications in a Short Time
Each loan application triggers a hard inquiry on your credit report, which can temporarily lower your score. If you apply for too many loans in a short time, lenders might think you’re desperate or struggling with money, which can hurt your chances of approval. Instead, do your research first and only apply for the loan you’re most likely to get. This keeps your credit score strong and shows lenders you’re stable. Try using loan eligibility calculators before applying to avoid unnecessary hard inquiries.
4. Show additional income sources
Supplementary income—from freelancing, rental properties, or a side business—can improve your loan eligibility by demonstrating a stronger repayment capacity. Showing these additional earnings lets the lender know you have more than one way to repay the loan, which lowers the lender’s risk. This also improves your debt-to-income ratio, which is a measure of how much of your income goes toward paying debt. Lenders see this as a positive sign and may be more willing to approve the loan or even offer a larger amount.
Choose a lender carefully
Not all lenders offer the same terms, so it’s important to choose one that best suits your financial situation. Lenders vary in their eligibility criteria, interest rates, and flexibility. It’s important to compare offers to find the best fit for your financial profile. By comparing different lenders, you can find one that aligns with your needs and increases your chances of approval. Choosing the right lender also means better repayment options, potentially saving you money in the long run.
Conclusion
In summary, improving your personal loan eligibility involves demonstrating financial responsibility and preparing your application thoughtfully. Avoid red flags such as a low credit score, excessive debt, frequent loan applications, or missed payments, as they signal risk to lenders. With smart planning and careful execution, you can increase your chances of getting approved—on favourable terms.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
