A personal loan can be your first and the most promising resort when faced with financial hardships. Unlike other types of loan, it is unsecured and is more or less dependent on your fiscal discipline.
As the COVID-19 situation may adversely affect the lending process, here are some simple tips that can help you to maintain a flawless application and enhance your personal loan eligibility.
1. Review and Improve Your Credit Score
Credit score determines your creditworthiness and is one of the most important factors lenders consider when determining your loan eligibility. Generally, applicants with a credit score of 760 or above have better chances of loan approval. And if your score is any less, make sure you raise it before applying for a personal loan.
By reviewing your credit score beforehand, you’ll know the efforts required to make the score a noteworthy one. One of the best approaches to improve your credit score is with timely repayment. Make it a habit to never default on loans or credit card bills and make sure you rely on credit, only when you need it.
Also, be careful about your debt-to-income ratio – which is the ratio that shows your income vs. the amount you pay as EMIs. Ideally, your EMIs must be within 40% of your income. So, for example, if you earn ₹50,000 per month, all your EMIs combined shouldn’t be more than ₹20,000.
2. Have a minimum of 6 Months Gap between Loan Applications
Applying for multiple loans to different lenders gives out an impression that you’re in dire need for a loan or requires numerous credits to meet your expenses. Financial lenders stay away from such candidates as they are seen to be riskier and lacking fiscal discipline.
Additionally, if multiple lenders reject your application, your credit score will suffer – making it even harder to get a loan. While applying for loans, make sure there is at least a six month’s gap between each application – even if you were approved the previous time.
If you apply for loans frequently, lenders will doubt your repayment capabilities and may reject your application. If your financial requirement is not urgent, wait for a few months more and then apply for an instant personal loan online.
3. Add a Co-Applicant or Take a Joint Loan
Having a co-applicant is another effective method by which you can increase your loan eligibility. Co-applicant share equal repayment responsibilities as yourself, giving financial lenders more reasons to approve your loan application.
Co-applicants only act as a supplement for your personal loan eligibility. If your credit scores are deficient, it might do little to no good by having a co-applicant. However, if you maintain an appreciable credit score, having a co-applicant can fasten the process and even raise the loan amount as lenders will find you less risky to deal with.
Also, make sure that the co-applicant also has a satisfactory credit score, stable income, and repayment history. The key is to give lenders more reasons to sanction the loan.
4. Choose a Longer Loan Tenure
While applying for an instant personal loan online, if your debt-to-income ratio doesn’t allow you to avail any more loans, try choosing a longer tenure. Longer loan tenure implies lower EMI amounts, which would reduce the burden placed on your monthly income.
However, longer tenure means that the amount you pay as loan interest will also be higher. To counter that, you can try for prepayment or foreclosure if you have surplus amounts. But make sure that the charges associated with prepayment are lower than the interest rates you otherwise will have to pay.
To conclude,These are some of the many methods by which you can boost your personal loan eligibility, especially during a crisis like the one we are experiencing now. In short, your financial discipline seems to be the key for better loan eligibility. Visit Fullerton India to apply online for a personal loan and avail instant approval with minimum documentation.