Personal loans are one of the credits that can be easily availed owing to the minimal terms and conditions governing these. Whether it is for a medical emergency, higher education, exotic vacation, or any other reason, these loans are always highly favoured.
Financial institutions, especially NBFCs, also have a simple list of eligibility criteria for personal loan that you have to fulfill. However, satisfying all of these is essential to have the loan approved quickly.
How to improve your loan eligibility?
Tips to improve personal loan eligibility are as follows –
A high credit score
Credit scores represent your creditworthiness and lenders will look for a higher score (750 or above) before granting the loan amount. It will also help you in bringing down the personal loan interest rates as well besides improving your eligibility for a higher amount.
Cite all income sources
Personal loans are unsecured and do not require any collateral or security from the borrower’s end. Therefore, citing all your sources of revenue will assure your lender about your repayment capability if you have a steady income every month.
Apply with a co-borrower
Taking a personal loan jointly also increases your eligibility. Two earning borrowers will be given more preference than other customers.
Lastly, you can also opt to apply for a loan with a reputed lender in case you meet the personal loan eligibility. They often extend loans faster and with minimum documentation, thereby minimizing the unnecessary hassle.
Simply put, make sure you follow the prerequisites of the lender before zeroing on a specific lender.
Improve your debt-to-income ratio
Your debt-to-income ratio indicates the amount you utilize from your income to pay your fixed monthly obligations. Ideally, the ratio should be not more than 50%. A lower ratio will also make you more favourable to avail the loan.
You can use a personal loan calculator to determine whether the new EMIs will lower your debt-to-income ratio significantly.