Tips to Increase Your Personal Loan Eligibility
5 min read | 5 months ago
What Can You Do To Increase Your Personal Loan Eligibility?
A personal loan is a kind of credit that allows people to support their finances without pledging any asset. Personal loans can be used to cover various financial needs, such as consolidating debt or purchasing an item that costs a lot of money without providing any collateral (security).Unlike other loans, a personal loan is a loan without any limitations on how the borrower uses the money.
You can apply for immediate loans online from different lenders. Loan eligibility criteria might differ from lender to lender. Customarily, lenders use a borrower's credit rating, monthly expenses, history of employment, and a ratio of debt-income to assess the possibility of a personal loan for the applicant.
Factors Affecting Personal Loan Eligibility
There are several factors which affect your loan eligibility.
- Credit Score: Your credit score is one of the most important factors lenders consider to determine your eligibility for a personal loan. A higher credit score indicates that you have a stable record of loan repayments. Therefore, you are more likely to repay your loan on time and may be eligible for lower interest rates and better loan terms.
- Income: Your income plays a significant role in determining your personal loan eligibility. Lenders usually have a minimum income requirement; if you do not meet that requirement, you may not be eligible for a personal loan. A higher income may also help you secure a larger loan amount.
- Employment History: Your employment history is another critical factor that lenders consider when determining your personal loan eligibility. Lenders prefer borrowers who have a stable job and a consistent income stream.
- Debt-to-income ratio: Your debt-to-income ratio measures your debt obligations compared to your income. Lenders use this ratio to evaluate your ability to repay your loan. If you have a high debt-to-income ratio, you may not be eligible for a personal loan or may be offered a higher interest rate.
- Loan Amount: The loan amount you are applying for can also impact your eligibility and loan terms. Lenders may have different eligibility requirements for different loan amounts, and you may need to meet certain criteria to qualify for a larger loan amount.
- Age: Your age is another factor that lenders consider when determining your personal loan eligibility. Most lenders require borrowers to be between 21 and 60 years old.
Ways To Increase Personal Loan Eligibility
Enhancing your personal loan eligibility can be a great way to secure a loan with better terms and interest rates. There are several ways to enhance your personal loan eligibility, including:
- Providing accurate and complete information: Make sure to provide all the necessary information in your loan application and ensure it's accurate to avoid any discrepancies.
- Adding a co-signer or collateral: A co-signer or collateral can provide additional security to the lender and increase your chances of approval.
- Improve credit score: Maintaining a good credit score is crucial for loan approval. Pay your bills on time, keep your credit utilization low, and monitor your credit report regularly to improve your credit score.
- Choose a Long Tenure: Choosing a long tenure lowers your monthly EMI, and lenders are more likely to approve loans with lower EMIs as it ensures you can repay the loan amount over a more extended period, improving your eligibility.
- Maintain Stable Employment: A stable job or regular income source makes it easier for you to repay the loan, increasing your eligibility. If you are self-employed, ensure you have a steady income stream and a profitable business.
Steps To Enhance Eligibility Before Applying
Enhancing your personal loan eligibility can be a great way to secure a loan with better terms and interest rates. There are several ways to enhance your loan eligibility, including:
- Maintaining a good credit score: A higher credit score can increase your chances of getting approved for a loan, leading to better terms and interest rates.
- Reducing your debt-to-income ratio: Lenders prefer borrowers with a lower debt-to-income ratio, which means you have more disposable income to repay your loan.
- Increase Income: Increasing your income is a smart move to boost your chances of getting approved for a loan or credit card. This shows lenders that you can repay the debt.
Conclusion
A personal loan has many advantages since you can use it for various purposes. However, applying for a personal loan may be difficult because of strict eligibility criteria. Following the tips above can easily boost your chances of being approved for immediate loans online.
FAQs
1. How can I boost my chances of loan approval?
You can boost your loan approval chances by improving your credit score, including a co-applicant and reducing your debt-to-income ratio.
2. Can I apply for an instant loan online with a 750 credit score?
You can apply for an instant personal loan online if you have a high credit score of 750 and above.
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.
