10 Smart Tips to Increase Your Personal Loan Eligibility

A personal loan is an all-around funding solution. You can use it for your children’s education, medical emergencies, buying a car, or any other needs.

It is an unsecured loan, and due to this risk, personal loan interest rates are generally higher than interest rates on other loans.

Personal loan eligibility, or the amount of personal loan you can apply for, depends on various factors. If you know the personal loan eligibility criteria, you can work on them and increase your loan eligibility.

Personal loan eligibility criteria

Documentation

KYC documents, Salary Slips, employee ID card, and salaried bank account

Statements are essential personal loan documents. Once you have them, you need nothing more to approve a loan application.

Income

Your income decides your capacity to repay the loan. Banks and financial

Institutions consider that people with higher incomes save more. More savings

This means more money is available to repay the loan. As such, people with higher

Income has higher eligibility scores than those with lower income.

Occupation

You should be an earning individual. You should have a regular source of income.

Whether you are a private, MNC a salaried individual, or a Government

Employee.

CIBIL score

Apart from your ability to pay, banks and financial institutions also check your

Willingness to pay. Your CIBIL score determines your desire to repay the loan. A good credit score has positively impactsr loan eligibility and vice versa.

Age

A resident of India aged between 23-55 years can apply for a personal loan. Age

It is a crucial element in deciding the tenor and the loan amount. The younger

You are applying for a personal loan in NZ, the more favorable it is for you.

10 Tips To Increase Your Personal Loan Eligibility

Here are some tips to boost your personal loan eligibility. Following them will help you get your loan application approved at a lower rate.

1. Improve your CIBIL score

CIBIL score is an impression of your creditworthiness. Improving your CIBIL score is vital for increasing your personal loan eligibility. You should review your credit report regularly to increase your CIBIL score.

2. Pay off existing loans

Existing loans and debts are not only a burden on you but also a risk for the lender. Hence, paying off your debts before making a personal loan application will increase your loan eligibility.

3. Add a co-borrower

You can add an earning family member like your spouse or parent as a co-applicant. Having a co-borrower means your loan application will be processed in a higher income bracket, making you eligible for a more significant loan amount.

4. Choose a longer loan tenor

You can choose a longer loan tenor to improve your personal loan eligibility. If you choose a longer tenor, you will have more time to repay the loan. A longer tenor is beneficial for both the borrower and the lender. Hence, it works towards increasing your loan eligibility.

5. An additional source of income

Your income is the essential eligibility criterion. Increasing your income through an extra source like house rent, interest on investments, etc., can increase your personal loan eligibility.

6. Avail Step-up loans

Availing step-up loans is beneficial for professionals as it increases their loan eligibility.

7. Pay credit card bills timely

If you pay your credit card bills on time, it boosts the lender's confidence that you will repay the loan on time. It also enhances your Credit score, which is advantageous for your loan eligibility.

8. Declare all sources of income

While making a loan application, it is important to declare all sources of income, such as rental income, income from dividends and bank interest, and interest on investments. Declaring all types of income enhances the chance of your loan application being approved.

9. Make an application to a known bank

If you make a loan application to a bank with whom you already have an account, it can be favorable. A trustworthy relationship with the lending bank can increase your personal loan eligibility for easy approval.

10. Maintain a low debt-to-income ratio

Your monthly debt divided by your gross monthly income is your debt-to-income ratio. The lower the debt-to-income ratio, the higher your loan eligibility. Thus, you should keep this ratio as low as possible.

Now that you know the tips for increasing your personal loan eligibility, you can proceed.