Availing a personal loan has become quite easy these days, it does not require any collateral and hence lenders have nothing to fall back on in case of default. To minimize these risk lenders are even more stringent about eligibility parameters.
Hence being an applicant it becomes pretty important for you to show positive cash flow. This can be easily done by providing your bank account statement, salary slip and it returns documents.
Knowing what the lender looks for helps you to get prepared and to provide a full-proof application.
Some of the important things you need to do before you apply for a loan are- run a check on your credit report for any default or late payments.
Credit card debt can also be a hindrance to loan approval, so reduce it as much as possible before applying for a loan.
Getting a personal loan approved requires you to make an application that gets the green light on every step of the processing. To help you do this, here are ways following which you can improve your chances of getting approved for a personal loan.
Balance your debts and income
Your debt to income ratio plays a significant role in your personal loan approval. When you have more debts on you in a fixed income, lenders consider you in the risk category who can default EMIs. Hence, in this case, your personal loan application may get rejected.
To get approved, you can show money earned from part-time jobs such as freelancing and from your investments too. This will add a plus point and can get your personal loan approved.
Improving your credit history
Before applying for a personal loan, get a copy of your credit report from Experian, CIBIL or you can also get it online through many websites who provide it for free. This will allow you to see in advance what lenders will see when they will review your application.
Once you have a copy of your credit report, check it properly for errors. In case you spot an issue, notify the bank who is responsible for it. Sometimes it can be something small like a payment not reported or even some smaller mistakes. Wait until these mistakes are corrected and then apply for your personal loan.
Research lenders to find the best fit
Regardless of whether you don’t have a good CIBIL score, on the off chance that you’ve picked the correct moneylender you can still get approved for a loan. Eligibility criteria required to get approved for a loan vary from lender to lender and hence you need to research well for the one who fits you the best.
Research well for eligibility, rates, offers, applicable terms and conditions and then apply with one.
Try not to apply for various credits all the while
At the point when you apply for a personal loan, lenders raise a request with the credit authority to survey your default chance. Such inquiries are hard and are recorded in your credit report. This makes you a high-hazard candidate and banks may dismiss your credit application. In this manner, it is prescribed to look for different loan offers by various money lenders before applying for a loan. You can likewise use a personal loan EMI calculator to compare among different offers.
Don’t apply for a larger loan amount than your requirement
The more money you borrow, the bigger the risk the lender takes on and the more income you’ll need to show. Small loans are easier to get approved for than large ones, because lenders aren’t putting as much money at risk, and these loans can be paid back even if your income isn’t very high. So figure out exactly how much money you need to accomplish your goals and apply for the minimum loan amount required.