Life is uncertain, and no one can predict when they might face an emergency requiring them to care for a few bills. This expense could be anything – from medical expenses, business costs, educational expenses, wedding costs, and so on. Now, while a personal loan can take care of these expenses, it is also essential for a borrower to be aware of their eligibility.
There have been cases in the past where borrowers have struggled with getting their loan applications approved. This is mainly because they are unaware of the factors that lenders consider while evaluating their loan applications. Getting multiple loan applications rejected is also a negative sign for any lender. This could cause a problem for the borrower when they need a loan in the future.
This does not have to be a problem as there are a few practical ways in which a borrower can reduce the chances of their loan application getting rejected. Read on.
1. Pay off all existing loans
Before applying for a personal loan, it is better to ensure that all existing loans have been paid off. If the applicant already has current debt they are paying off, taking on another personal loan can further increase their monthly expenses. With a low repayment capacity, the applicant might be a risk for a lender, which can get their application rejected. It is better to clear off all existing debt before taking a personal loan.
2. Focus on your credit score
It is imperative to maintain a decent credit record. Financial institutions always check the applicant’s credit score before approving their loan application. Ideally, it is best for the applicant to keep their credit score above 750 while applying for a loan.
3. Earn a decent monthly income
One of the most critical factors for a lender evaluating an applicant’s profile is their monthly income. If they draw a good amount every month, the risk of defaulting on the loan is shallow. This becomes a clear case for the lender. It is better to earn a steady monthly income and have good job stability at a reputed organization. This can help in boosting the borrower’s loan eligibility.
4. Choose a lender that sets essential eliessentiality criteria for a personal loan
Choosing a financial institution that sets borrowers’ minimum and necessary per critical loan eligibility criteria is always best. Usually, lenders only require an applicant to be an Indian citizen between the ages of 21 to 58 years, earning a basic monthly income of Rs. 25,000, and working for a public/private limited company for at least a year.
Keep these tips in mind to avoid getting your loan application getting rejected. Also, feel free to make use of a personal loan eligibility calculator, which will help in understanding the loan amount that you can be eligible for.