An eligibility criterion is crucial to those who are in need of a personal loan. It is determining the total loan amount that you can borrow with the bank or the Non-banking Financial Company (NBFC).
Often, we feel that we fall short of any of the eligibility parameters laid down by these personal loan providers. There is absolutely nothing to worry about this!
However, there are certain ways to improve your personal loan eligibility.
- Pay Off Any Existing Loan
- Maintain Healthy CIBIL Score
- Clear Your Credit Card Bills on Time
- Find Alternative Source of Income
- Keep a Tab on Your Variable Pay
- Choose a Long-Term Tenure
- Pay Off Any Existing Loan
For a loan provider, it is obvious that we should have a clean charted history of clearing debts on time. This is because sometimes it becomes difficult to manage the EMI (Equated Monthly Instalments) of a new loan when you already have a debt to repay.
An existing loan may put a doubt in the personal loan provider’s mind about your additional loan repayment capability. Therefore, before you approach any personal loan provider, make sure you clear the balance of any outstanding loan or any other financial debt.
Not only will this help make a good impression on the personal loan provider, but it will also help you better budget your new EMIs.
Challenge above the average CIBIL score
In order to avail any kind of personal loan in India, it is important that you have a good CIBIL score. A CIBIL score is a three-digit number whose value is reflected based on a person’s past financial credit history.
Practically, a CIBIL score of 700 and above is considered as a good CIBIL score. A lot of personal loan providers in India take into account your CIBIL score in order to determine the total amount of loan you are eligible for.
Hence, making sure that maintaining a healthy CIBIL score can impromptu a naturally good remark on us. All this, before approaching any bank or NBFC for a personal loan.
Make the most of your credit cards.
By this, WE refer not to the financial limit, but to the opportunity of building one’s credit score. Credit score and credit card significantly affect each other. If, we always have marginal repayment, ultimately affecting the chances of being eligible for a sizable personal loan. A credit score is critical.
Therefore, make sure that you clear all your credit card payments on time. Another advantage of being punctual with your credit card payments is the fact that it gives a positive message to the creditors, that you will not default on any of your monthly instalments.
This could help build trust between you and your personal loan provider, further boosting your personal loan eligibility.
Having an alternate source of income
It can be intriguing at first, finding multiple sources of income doesn’t have to be difficult, and it can be the solution to achieving more financial stability.
This alternate income can be generated in various ways. For instance, if you have any commercial or residential property, you can rent it out and use that money as an alternative source of income.
In case, we do not hold any such assets but have a working spouse, we can even apply for a joint personal loan. All this, in order to increase the personal loan eligibility.
Taking a joint personal loan also decreases the liabilities of repaying the loan. This helps avoid any financial strain on yours, as well as your spouse’s monthly budget.
Keep a Tab on Your Variable Pay
Variable pay is a benefit offered by most employers in the form of bonuses, incentives, or commissions. At the time of applying for a loan, ensure that you have an updated record of your variable pay. Some personal loan providers take this record into consideration while determining your personal loan eligibility.
Choose a Long-Term Tenure
While applying for a personal loan, one can either choose a short-term or long-term personal loan tenure. A short-term tenure lasts between 1-5 years, whereas a long-term personal loan can be tenured for 5 years and above.
Can I avail a personal loan if I require funds for business needs?
Yes, you can avail personal loans for your business needs. However, certain lenders may only offer personal loans to salaried employees. Thus, make sure to check the eligibility criteria specified by the lender before applying for the loan.
The biggest advantage of long-term tenure over a short-term personal loan tenure is the EMI amount gets significantly reduced. This is because, as the tenure extends, the outstanding loan balance gets divided over a longer period.
With this, the EMI amount gets reduced, it decreases the chances of a borrower defaulting on his/her loan. Hence, the personal loan provider can also get a relief that the borrower will be able to repay the loan over the long tenure. Thus, opting for a long-term tenure could significantly boost your personal loan eligibility.
Further, it is important that we don’t end up wasting time on repayment hassles. When we can have a whole world of opportunities and financial stability at our feet.