How You Can Increase Your Chances Of Getting A Personal Loan

Disbursement of unsecured loan involves a certain amount of risk on the lenders’ part. This is because of the absence of collateral. Consequentially lenders are cautious about approving a personal loan. This does not mean that banks or non-banking financial companies (NBFCs) are not eager to disburse personal loan, they are just scrupulous about the borrower.

A financial crunch may not come announced; it is better to assume certain practices that can keep you creditworthy at all times. There are certain things you should do and some other things you should abstain from doing in order to make sure a quick approval of a personal loan from the lender of your choice.

The Do's

1. Check the personal loan eligibility criteria before applying

You do not want to be taken by surprise after you have applied to a certain lender. The eligibility criteria may vary from lender to lender. But they usually involve your credit score, monthly income, citizenship and repayment history. You can use personal loan eligibility calculator to make sure that you are eligible for a loan.

2. Maintain a good credit score

Your credit score is a numeric expression of your ability to repay a debt. Personal loan lenders take account of your credit score before approving a loan; it also determines the upper limit of the loan amount that can be disbursed to you. You can well understand how important it is to maintain a good credit score. According to the current industry standards, a credit score of 750 on a scale of 300 to 900 is considered good. If you maintain such a credit score lenders will be eager to offer loan to you.

3. Make sure your debt to income ratio is under control

The FOIR or fixed obligation to income ratio plays an important role in your receiving a personal loan. It is better to be careful that the monthly EMI repayment is always less than half of your monthly income. Not only does it increase your chances of getting a personal loan but it also keeps financial stress at bay.

4. Choose a lender that suits your requirements.

Services, facilities as well as the interest rates and processing charges differ from lender to lender. It is better to compare different lenders before you apply for a loan. You should calculate the EMI for each lender and make sure you are opting for the most profitable offer while minimizing risk. Some lenders like Bajaj Finserv offer flexible plans.

Look out for such offers to reap better value. There are often preapproved loans depending on your personal loan eligibility. You can avail pre-approved loans from lenders like Bajaj Finserv simply by providing some details.

The Don’ts

1. Do not apply to too many lenders

Every time you apply for a personal loan, the corresponding lender pulls your financial details. This is called a hard pull. A hard pull puts impact on your credit score. Too many hard pulls can severely damage your credit score thus reducing your possibility of getting a loan.

2. Do not apply for a loan too often

There should at least be a gap of 6 months between to applications for personal loan. If you apply for personal loans too frequently it shows a financial imbalance on your part. This discourages lenders to disburse a loan to you.

3. Never make a delayed repayment

A delayed EMI repayment may attract severe penalties but that is not the only matter of concern. Every time you make a delayed payment it hurts your credit score and consequently your eligibility for getting a personal loan.

Read Also: 5 Easy Ways to Get a Personal Loan without Damaging your Credit Ratings

These loan approval tips should help you to secure a personal loan online. Just remember that a good credit score and clean track record will always see you through. Always keep your financial details handy and read the offer documents carefully to avoid any inconveniences.