Personal Loan Eligibility
Personal Loans are unsecured which makes it affordable to the common people. Secondly, the freedom to use it makes it the first choice for most of the people who are in urgent need of money.
People generally opt for a personal loan when they fall short of money to fund any kind of expenses. It is quite easy for an individual to apply for a personal loan as it is widely available.
But, on the other hand, lenders who provide personal loans are at more risk as they don’t have anything to secure against their lending. So, minimize their risk factor it becomes more important for lenders to have eligibility criteria for personal loans to check whether applicants applying for it can repay it or not. However, digitization has changed the entire process and has made it more convenient for the people to have a personal loan as one it can be applied online now. Still, the eligibility criteria remain the same and in terms to qualify for a personal loan you need to meet.
In this section, we will be discussing about your loan repayment history (CIBIL) and it impacts on your new personal loan.
Your Loan Repayment History is one of the most Personal Loan Eligibility Criteria
Loan repayment history is the record of your previous borrowings. It is contained in your credit report and also influences your CIBIL.
If you are timely with your payments, then your repayment history will also be good positive. And so will be your CIBIL. In case you are not timely with repayments or you miss paying even a single EMI, it will reflect in your credit history and CIBIL, and will affect your credit score.
On your credit score depends your future credibility.
A credit score is one among those which decides whether you are eligible for a loan or not? Whether you will be approved for a loan or not. The credit score is also known as CIBIL score in India as the. In India, Credit Information Bureau of India Limited (CIBIL) has all the records of the repayments made towards the loans and credit cards held by people.
If you have no default in your loan repayment history then you will have a very good credit score and hence your chances to get approved for a loan will be more. But if have defaulted in your loan repayment history, then your CIBIL score will be low and chances to get approved for a loan will also reduce.
Tour loan repayment history denotes how reliable you are. if you have a good repayment history lenders gain confidence that if you were good previously then there are more chances that you will be good this time as well. Hence they feel safe in lending to such an applicant as compared to lending money to those who have low CIBIL. So, you can say that it determine your creditworthiness.
Dos and Don’ts to Improve Your Personal Loan Eligibility
- Check your eligibility before you apply for the loan.
- Doing this reduces the chance to get rejected for a personal loan as you already know your eligibility. You can check this on bank’s online portal.
- Apply for the amount for which you are eligible.
- Use the online eligibility calculator to know for how much amount you are eligible.
- Be timely with your repayments
- Timely repayments for your loans
- Timely repayments matter a lot. It increases your credibility and increases the chance to get approved for future borrowings.
- Try to keep your credit utilization ratio below 30%
- Keeping your credit utilization ratio low helps you to have a good impression and improves your credibility.
- Taking multiple loans.
- Having a high credit utilization ratio.
- Defaults for your previous borrowing.
- Applying frequently for a loan with different lenders.
Personal loans are now online loan applications which are easier for people to apply for. Personal loans provide you immediate funds and can help you in emergencies. But, to avail it you need to meet some basic eligibility criteria which include your previous loan history. So, an applicant should always consider this and should make timely payments to be creditworthy for the future.