You are worrying about 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. It would help if you also were employed for at least three 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 utilization
- 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 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 loan application, try reducing the DTI ratio by:
- Increasing your income (such as by negotiating a higher salary with your employer)
- Consolidating 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 chosen bank’s website 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 organization 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 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 to pay the EMIs conveniently.