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While there is no magic wand that can get your application approved, here are
9 lesser-known facts that can help you avoid the pile of rejected
personal
loan applications while improving your odds of success.
Compare Your Options and Apply Only Where Your Chances of Acceptance are
High
Different lenders have different approaches to risk and so, while some are
willing to accept personal loan applications even from those with a low CIBIL
Score, others have a strict eligibility criterion that you must fulfill if you
want an approval.
Start by checking your credit score and assess your chances of being accepted
for a personal loan. A high score of 750 means you are most likely to get
accepted but a low score can prove to be an obstacle. In this case, you would
need to conduct a soft search and compare lenders and products to know your
chances based on their eligibility score.
Study the Credit Requirements and Work on Your Score Accordingly
Every lender requires you to have a different credit rating so check if you meet
them. These requirements typically mean that you should not have any negative
listings on your credit report. If you are not sure, ask the lender before
applying for a personal loan. Most lenders have a dedicated online chat service
to address your queries.
Your credit history, your previous credit dealings and your personal loan
applications are the 3 most important things that determine your chances of
approval or rejection. So review your credit report carefully, ensure that all
your debts are cleared, all the accounts involving credit are clean and all the
information is correct.
Only Apply for Loans That You are Sure of Repaying on Time
Every lender needs to ensure that the borrower is financially stable and does
not have any existing debt obligations. So, before you apply for an instant
loan, create a budget and assess your ability to repay the EMIs on time.
Calculate your monthly spend on food, clothing, travel, groceries, bills and so
on to arrive at a figure that you can safely set aside for your EMIs over a long
period. However, if you plan to spread your repayment tenure over a longer time
frame, you will end up paying more in interest.
Check the Minimum Income Requirements
Every personal loan lender will have a different minimum income requirement
which may also change depending on the type of personal loan you need. Find out
the required minimum income online and check your CIBIL score to ensure your
loan is approved.
Make Sure the Purpose of Your Loan is Valid
Check online to see to if your loan purpose is actually allowed by lenders. If
you are taking a secured personal loan, you may be faced with more restrictions
as compared to an unsecured personal line of credit. However, every loan type
comes with its own share of pros and cons.
Double Check Your Details
Verify your details and personal information to make sure the lender has no
reason to reject your personal loan application on the basis of inaccurate
information.
Confirm if Your Lender Needs Collateral
Certain lenders require collateral against the personal loan, and so they also
check your assets to confirm that there is no risk involved. If you are looking
for a personal loan that does not need collateral, you can opt for a personal
line of credit.
Repay Your Existing Loans
The lenders won’t approve your personal loan if they find out that your income
is not sufficient or your debt levels are going up and down or if you are
already overloaded with debt or credit card issues. For this they calculate your
debt-to-income ratio so before applying for a personal loan, make sure all your
previous debts are cleared. Your debt-to-income ratio is calculated by dividing
your repayments by your monthly income. Make sure to
calculate personal loan EMI
before going ahead.
Build a Credit History
If you don’t have a credit history, you can secure a personal loan using your
savings account or a certificate of deposit or you can apply online for a
personal line of credit and get approved in minutes. If you are building your
credit history from scratch, it is recommended to start with a secured credit
card. Since your credit history is made up of your repayments, debt utilization,
your credit applications and your credit mix; you should make on-time payments,
retain a good credit mix, and maintain low credit card balances. You also need
to keep a constant eye on your CIBIL Score and if you have an outstanding tax
lien, you must pay it off as soon as possible to keep your credit report clean.
Following these 9 tips will drastically improve your chances of approval so keep
this checklist handy and get started with your application.
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