Here are 5 tips on how to improve your chances of a personal loan approval. Personal loans are unsecured loans and highly expensive. So, unless it’s absolutely necessary one should avoid such high-interest loans .
However, getting a personal loan is a difficult task without any collateral security, as lots of eligibility conditions to be fulfilled to get a loan sanctioned.
Rohit Garg, CEO and co-founder, SmartCoin, says “An instant loan assists individuals to meet their financial requirements. Such a loan is useful if you have unforeseen expenses to address especially in the short- or medium-term period.”
How to improve your chances of a personal loan approval
1. Your debt-to-income ratio to be decreased
Before applying for a personal loan, ensure that you pay off your existing debts and credit card bills to reduce your debt-to-income ratio. The total amount of EMIs that you are liable to pay every month should not exceed 30-40 per cent of your monthly income.
2. Improve your CIBIL score
Read how to rectify your credit score in details. You must have a good enough CIBIL score for any instant loan request to be approved. A credit score is a 3-digit number that shows your creditworthiness to the lender and aids in calculating your risk of default. It reflects how you have managed your finances and bills in the past. The lesser the score, the lower are your chances to approve your loan application and vice-versa. Most of the lenders in the country depend on the CIBIL score, which ranges between 300 and 900. A credit score of more than 725 is affirmed as a desirable score.
3. You should include all sources of income
Lenders want to view an applicant’s total income to calculate his or her repayment capacity. So, while filling up the online loan application form, it is recommended that you should include not only your regular salary but also additional sources of income like rental income, part-time income, etc. It can increase the chances to approve the loan application.
4. You should not apply for multiple loans at one go
If you apply for multiple loans at one go, all the lenders are likely to initiate multiple inquiries on your credit report. As a result, this will automatically bring down your credit score. Since you may come across as an insatiable borrower, your loan application may also be rejected. Therefore, it is better to apply for one loan that best fits your requirements and personal loan eligibility after comparing all the options.
5. Select a lender with the eligibility criteria you can fulfill
Verify the various eligibility conditions of different lenders and choose the best one whose eligibility criteria can be fulfilled by you, instead of applying to multiple lenders simultaneously only to check that you are not eligible for all of them.
It will be helpful to you to read how to improve your credit score in details from the below article..