Personal loans are extremely convenient form of financing as you can obtain one without pledging collateral. Moreover, you can use the funds for any purpose. However, to get approval, you must meet the personal loan eligibility criteria set by your preferred lender. These are generally income- and employment-related and give the lender assurance that you won’t default. Since meeting the loan eligibility terms is a vital step in the approval process, it’s essential that you know how to improve your prospects.
Here are 5 tips that will help you boost your personal loan eligibility.
Ensure that you have a spotless credit history
Personal loans are a form of unsecured lending and so, to be sure of timely repayment, lenders look into your credit report and score. Doing so gives them a good indication of how you have dealt with borrowed funds in the past. Having a credit score of 750 and above is extremely beneficial, as it shows you are responsible with credit and improves your chances of getting financing on favourable terms. If you need to boost your credit score, work on paying off pending dues and keeping your credit utilisation ratio within check.
Keep your debt-to-income (DTI) ratio within bounds
While your credit score is vital to the personal loan documents approval process, your eligibility hinges on another parameter, your debt-to-income ratio. This metric indicates how much of your monthly income is available to service the loan. Lenders tend to set a DTI limit of around 40%, and rightly so, as you can expect around half of your income to go towards regular spends. To keep this ratio within acceptable limits, you must apply for only as much you can manage. Moreover, indicate all sources of income for repayment and choose a comfortable tenor.
Avoid making multiple applications in a short timeframe
In an effort to secure approval, you may resort to applying to multiple lenders at once. However, this impacts your personal loan eligibility, as it causes your credit score to drop. The reason behind this is that each credit application is lodged as a hard inquiry in your credit report and causes your score to drop by around 3 to 4 points. While it may not seem like much, the cumulative effect of multiple hard inquiries made at the same time can be detrimental and lower your credit score. This makes it tougher for you to secure financing.
Apply jointly with a creditworthy individual
If you are in need of financing urgently and do not have the time to improve your credit score, you can consider partnering with a creditworthy person. With more than one person’s income backing repayment, lenders are more likely to offer you the financing you seek. By improving your personal loan eligibility, you also put yourself in a position to get financing at a favourable interest rate.
Choose a lender that has simple onboarding terms
While eligibility criteria are broadly the same across lenders, minute details may vary. Therefore, it’s a good idea to pick a lender, where the criteria is easy to meet so that you can get the funds you need quicker. For instance, while you need to have a regular income, each lender may have its own minimum salary requirement. When you opt for a Bajaj Finserv Personal Loan, however, you only need to have a minimum monthly income of just Rs.25,000 if you live in cities like Lucknow and Indore, or Rs.35,000 if you reside in cities like Bangalore and Mumbai.
Additionally, Bajaj Finserv’s other eligibility terms are basic too. You can obtain financing if you are between 23 and 55 years of age, work at an MNC, public or private company, and are a resident of India.
Obtaining approval for Bajaj Finserv Personal Loan gives you access to funds of up to Rs.25 lakh, available on a collateral-free basis. You can repay this over a flexible 60-month tenor and use the personal loan calculator to plan repayment effectively. Further, you can opt for the flexi loan facility to access financing on the go. With this feature you can borrow in parts, as per your needs, and pay interest only on what you withdraw. Additionally, you can reduce your EMIs by up to 45% by servicing interest-only instalments for a part of the tenor.
To obtain this financing solution on simple personal loan eligibility terms, check your pre-approved offer. Doing so gives you a customised deal whereby you can expedite the rate at which you access funds.