Top 10 Tips to Increase Your Personal Loan Eligibility

A personal loan is an instant funding option that comes in handy for planned and unplanned expenses. When weddings, vacations, home renovations, education, medical emergencies, or other big-ticket expenses go beyond an individual’s financial capabilities, they take Personal Loans and repay them in EMIs. However, qualifying for a Personal Loan depends on several factors as required by the lending institution. 

Here are the top 10 tips to increase your personal loan eligibility and improve your chances of getting quick funds.

1. Know the Eligibility Criteria: Before applying to a lending institution or NBFC, check their eligibility criteria, including age, employment, income, and more. You can check their website for eligibility criteria to ensure you meet them. 
2. Apply for an Affordable Amount: Overborrowing beyond the repayment capacity lowers the chances of approval. Pay attention to your income and financial obligations to decide on a loan amount that is easy to repay.
3. Maintain a Decent Credit Score: Lending institutions evaluate applicants’ credit scores to measure their creditworthiness. Check your credit score before applying and ensure it fulfills the NBFC’s minimum requirement. A credit score of 630 or above can increase the chances of loan approval at lower interest rates. 
4. Check Debt-to-Income (DTI) Ratio: An individual’s DTI ratio indicates their disposable income with respect to their income. Lending institutions prefer applicants with a DTI ratio of less than 30% to ensure timely repayments. 
5. Avoid Multiple Loan Applications: Many loan seekers approach several lending institutions and NBFCs at once to secure a loan with the best deal. However, NBFCs consider such applicants as credit-hungry and reject their loans. So, research before applying to finalise the lending institution with the best loan offer.
6. Add a Co-Borrower: Many NBFCs allow joint Personal Loan applications with a spouse or parent. If the primary applicant does not fulfil the income criteria, the co-applicant’s eligibility is an added benefit to getting assured approval. 
7. Ensure Enough Gap Between Applications: Since multiple applications may affect the credit score, keep a gap of at least six months between the two. If the need is not urgent, take time to improve your credit score and apply with improved personal loan eligibility.
8. Keep Income Proof Ready: Besides KYC documents, keep income proofs, such as the last three months’ salary slips or the current year’s Form 16, ready. It will make you eligible for a sufficient loan amount and ensure your chances of loan approval.
9. Select a Longer Tenure: An extended loan tenure will divide the EMIs into smaller amounts, making them easily manageable. As the loan becomes easy to repay, it reduces the lending institution’s risk and improves loan approval chances.
10. Provide Correct Information: While filling out a loan application form, enter accurate information and double-check for smooth processing. Avoid spelling mistakes, inaccuracies, or wrong information affecting loan approval. 

Keep these crucial tips in mind to ensure hassle-free and quick Personal Loan approval. The key is maintaining a high credit score and fulfilling eligibility criteria for a stress-free and convenient loan process. check credit score and double-check loan application before submission to get quick approval.

About the Author

Amaira sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.