An unsecured personal loan is the most readily available credit option that helps borrowers gather money during financial extremity. The personal loan segment has escalated by 2.3 times with respect to value and 3.8 times in terms of loan disbursal.
However, borrowers must improve their personal loan eligibility to receive instant financial aid. With reputed financial institutions like Bajaj Finserv, individuals can get an instant personal loan and use it to meet varied financial requirements. However, as a personal loan does not involve any collateral, it becomes imperative for financial institutions to scrutinise borrowers’ eligibility; whether they can repay the loan amount.
Know 5 steps to boost your personal loan eligibility with Bajaj Finserv
Borrowers willing to avail of a personal loan must factor in the following to boost their eligibility-
Step 1: Maintain a decent credit score
Since a personal loan is an unsecured credit option, the loan amount is disbursed after lenders scrutinise the borrower’s credit score. A credit score of 750 and above is considered ideal and indicates that a borrower has a decent credit history. The CIBIL score is the numerical summary of a borrower’s creditworthiness and reflects how consistent a borrower has been with their repayments.
A borrower with a substandard CIBIL score is considered a high-risk borrower, resulting in rejection of loan application or levy of a higher personal loan interest rate.
Step 2: Avoid multiple loan applications
When borrowers have multiple loan liabilities, it results in multiple debts. Lenders will estimate borrowers’ default risk by strict enquiry and verification of loan repayments, which might result in rejection of loan application or lead to lower credit score.
Hence, comparing lenders and settling for one that suits the borrower’s requirements and eligibility is recommended. Sticking to one credit option and repaying it on time helps boost personal loan eligibility.
Step 3: Keep a check on the debt-to-income ratio
Another effective way to improve personal loan eligibility is to reduce the debt-to-income ratio. Borrowers must pay off their existing debts before applying for a personal loan. Current loan liabilities and credit card bills may act as a hindrance in getting another credit option. Borrowers’ total EMI amounts should not exceed 30% to 40% of their income status. Striking a proper balance in the debt-to-income ratio will help one improve personal loan eligibility.
Once borrowers are eligible to get a personal loan amount, they can use it to consolidate debts; hence borrowers can try to combine all debts and repay them with a personal loan.
Step 4: Reveal additional sources of income
Borrowers’ income status is scrutinised thoroughly to estimate their repayment capabilities. Hence, borrowers must mention all additional income details, including rental earnings, part-time earnings, etc., along with their monthly income status. Submitting these details will assure the lender that borrowers have timely repayment capabilities; hence will help enhance personal loan eligibility. In addition, showing a steady source of earnings will help borrowers receive the lowest interest rate personal loan.
Step 5: Lower the credit utilisation ratio
Borrowers, especially credit card holders, must compare the debt liability with the available credit balance. A higher credit utilisation ratio leads to a lower credit score. Borrowers must use the credit limit properly to improve personal loan eligibility. Furthermore, keeping a tab on the credit utilisation ratio helps one manage finances better.
Furthermore, search for different lenders and compare their eligibility norms. Finally, borrowers should settle for the one offering easy-to-meet eligibility criteria. Also, borrowers should apply for a personal loan only when they need it. Borrowers applying for personal loans frequently end up affecting their credit scores. Rampant borrowing indicates that a borrower is recklessly spending money. Moreover, not repaying the loan principals on time puts borrowers under financial stress. Borrowers can only improve their loan eligibility if they repay the loan on time.
Besides knowing how to improve personal loan eligibility criteria, borrowers should also have an idea of how to apply for a personal loan. Knowing these basic intricacies of the credit option will help borrowers navigate the entire loan process effectively.
Moreover, a well-rounded idea regarding the mistakes to avoid while applying for a personal loan will allow borrowers to make an informed decision and dodge last-minute turmoil.
Borrowers eligible for personal loans can also check the specially-tailored pre-approved offers extended by financial institutions on products like personal loans, business loans, credit cards, etc. These offers ensure hassle-free and expedited loan application procedures. Interested borrowers can check the pre-approved offers by submitting their names and contact details.