Worrying how to qualify for a personal loan? First, choose a lender offering competitive interest rates. Then check the eligibility criteria for the loan. Usually, you must be 23-60 years old as a salaried individual or 25-65 years old as a self-employed person to qualify for an instant personal loan application. You must also be employed for at least 3 years.
Once you meet these criteria, try the ways below to increase your loan eligibility.
6 Tips to Increase Personal Loan Eligibility
#1 – Improve Your Credit Score
The lender checks your credit score and history before granting you a loan. Good credit history and high credit score (above 700) can improve your eligibility for a personal loan and get you one at a low-interest rate.
You can boost your credit score by:
- Clearing credit card bills in full on time
- Proper credit utilisation
- Making timely loan payments
#2 – Maintain a Low Debt-To-Income (DTI) Ratio
The lender also checks your DTI ratio to decide your eligibility for a loan. Calculate the ratio by simply dividing your gross monthly outlay by total monthly income.
Include the following expenses in your total monthly outdo:
- Health insurance
- Car insurance
- Loan payments
- Credit card bills
- Medical bills
- Other dues (except for utilities, taxes, and household expenses)
To increase the chances of instant approval of your personal loan application, try reducing the DTI ratio by:
- Increasing your income (such as by negotiating a higher salary with your employer)
- Reducing your existing financial liabilities (for example, by choosing a lender who offers balance transfer of existing credit cards and loans at affordable rates)
#3 – Consider Getting a Co-Signer
You can get a co-signer from your family or friends with a high CIBIL score if you have:
- A low credit score
- A high debt-to-income ratio
Then the credit risk of approving a loan will reduce and you can get an instant personal loan online.
#4 – Choose a Reasonable Amount of Loan
When you want to apply for an instant loan, the lender will check your capability to repay it. So, opt for a reasonable loan amount that you can pay off and be eligible for. Use the EMI calculator on the website of the chosen bank to know your monthly payments.
#5 – Use Your Professional Credentials
You can impress the lender for quick loan approval if:
- You have a high income and prove it with valid documents like income tax returns.
- You work at a reputed organisation and produce its details.
#6 – Avoid Applying at Multiple Lenders
It’s better not to apply at several lenders so that:
- You can save hard inquiries into your credit score whenever lenders check your credit history. Once the score isn’t affected, it can help you qualify for a loan.
- A lender doesn’t deduce that your previous loan requests have been rejected. Then you won’t seem desperate to take a loan anyway. This can improve your personal loan eligibility.
After getting a loan, use it to finance anything from big purchases to emergencies. Ensure that the lender offers a flexible repayment tenure so you can pay the EMIs conveniently.