Tips to get your personal loan application approved
Personal loan is a type of unsecured loan which means that it does not require any collateral as security for the lender. Different lenders charge different interest rates for personal loans. Your credit history is the basis on which financial institutions decide to accept or reject your personal loan application. You can avail a personal loan for funding various expenses such as those of higher education, medical treatment, and home purchase and so on. Following are some tips to increase the chances of getting your personal loan application approved:
- Meet the Eligibility Criteria: Fulfilling the basic eligibility criteria required by the lender is a prime prerequisite for getting your personal loan application approved. It would be wise to check the personal loan eligibility criteria of different lenders separately before choosing to apply for a personal loan. There are some basic criteria that most reputed lenders require in order to process your personal loan application. For instance, in order to meet the personal loan eligibility criteria of most lenders, the applicant’s age must be between 21 years to 60 years and the applicant must be employed by a public or private company. Working on improving your personal loan eligibility through striving for better creditworthiness is the key to personal loan approval.
- Do Not Apply to Multiple Lenders Simultaneously: Applying for a personal loan to multiple banks at once hurts your chances of getting your personal loan application approved. Banks do not prefer that an applicant applies for a personal loan to several banks simultaneously as this reduces the possibility of an applicant choosing a particular bank. The more banks an applicant applies to, the less probability of a particular bank getting chosen. Apart from this, multiple personal loan applications to several banks simultaneously also has a negative impact on your credit score and a lower credit score will lead to rejection of your personal loan application.
- Strive for a Good Credit Score: A good credit score goes a long way in enhancing your chances of getting your personal loan application approved. A credit score is a measure of your creditworthiness, that is, your commitment to pay all your bills and dues on time. A credit score is based on your past track record of repaying your loans, your debt to credit ratio, credit utilization and other factors in your credit history. Credit score ranges between 300 to 900 and a score above 700 is considered a good score. A high credit score will add value to your personal loan eligibility and increase the chances of your personal loan application getting approved.
- Choose a reasonable loan amount: Choose your loan amount after carefully considering your repayment capacity. Banks look at your debt to income ratio and if you have debts amounting to more than 30%-40% of your income, there is a chance that the lender will not approve your personal loan application. Banks look at your current income, savings and existing debts to determine your personal loan eligibility. Thus, you need to apply for a personal loan amount that you can repay comfortably.
Thus, the above steps can aid you in increasing your personal loan eligibility and getting your personal loan approved. Work on getting a good credit score, a stable well-paying job and achieving a good repayment capacity in order to get your personal loan application approved.
Story by Paul Harris