Personal loans are unsecured loan instruments that you can obtain without pledging an asset as collateral. Further, you are given full freedom with regards to utilisation. These attractive benefits make a personal loan one of the most preferred modes of financing both planned and unplanned expenses. However, since the loan is not backed by any asset, some amount of lending risk is involved. To mitigate this, lenders often list stringent personal loan eligibility terms that determine if you qualify for funding. So, to get your loan application approved in the first attempt, it’s a good idea to better your eligibility before you apply. Here are 5 tips that you can employ to do so.
- Improve your credit score
Your credit score is a number ranging between 300 and 900 that indicates your repayment capabilities and credit history. Therefore, possessing a high score increases your chances of getting loan approval easily. Scores of 750 and above are considered ideal and allow you to obtain funding at favourable personal loan interest rates. So, it’s advised that you bring your credit score closer to the 750 mark before you apply. To increase your score, pay current loan EMIs on time, avoid maxing out your credit cards, pay your credit card bill in full and rectify mistakes in your credit report, if any.
- Bring down your debt-to-income ratio
Your debt-to-income (DTI) ratio involves measuring your debt in relation to your total monthly income. Lenders inspect this parameter to ascertain whether you have enough liquidity to service the loan on a monthly basis. If the personal loan EMIs, in addition to your fixed obligations, cause your DTI ratio to cross the 40%-mark, you may face rejection. So, strive to keep your DTI as low as possible to avail a personal loan without any hassles. You can do this by clearing unpaid loans first or looking for an additional stream of income.
- Choose a joint application with a creditworthy individual
In the event that you cannot improve your credit score and DTI ratio immediately, consider roping in a co-applicant who has excellent financial credentials to enhance your personal loan eligibility. With a larger pool of income backing the loan, you’ll probably benefit from more relaxed eligibility terms as well as a higher loan amount. If you are considering this option, do look up your lender’s terms and conditions to know who can qualify as a co-applicant.
- Avoid making multiple loan applications
It’s best that you do not apply to multiple lenders at once, hoping to get at least one of your applications approved. This is because multiple loan applications made in a short frame of time have the potential to damage your credit score significantly. Each time you apply, your lender checks your credit report and a hard inquiry trims your score by 3-4 points. So, it’s best that you shortlist a couple of lenders and work on meeting their personal loan eligibility criteria instead of applying haphazardly.
- Select your personal loan lender wisely
Handpicking a lender that has a minimal eligibility and documentation requirements helps you obtain funding without any hurdles. Lenders such as Bajaj Finserv have simple personal loan eligibility criteria pertaining to your age, employment status and income. In fact, as long as you are between 23 and 55 years of age and possess an adequate, steady stream of income you stand to obtain a Personal Loan of up to Rs.25 lakh from Bajaj Finserv. Further, you get the amount disbursed to your bank within 24 hours of approval.
The NBFC also offers the Flexi Loan facility that permits multiple withdrawals from the approved sanction. You can withdraw without having to make multiple fresh applications and interest is charged on the withdrawn amount only. You can also choose to pay interest-only as EMIs for the initial part of the tenor to decrease your monthly instalments by up to 45%.
Now that you are aware of how to boost your personal loan eligibility, don’t forget to check your pre-approved offer from Bajaj Finserv to avail funds conveniently. This instant deal streamlines the application procedure and helps you enjoy the loan on customised terms.
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