Lenders have to be diligent in checking an applicant’s personal loan eligibility. This is because these are unsecured loans. The applicant doesn’t need to provide any collateral to avail them. So, in case of a default, the lender has nothing to fall back on.
Apart from basic eligibility requirements, the loan providers consider other factors like your credit history, current assets and liabilities and repayment capacity. These factors will determine the total loan amount you can borrow and also the interest rate applied.
You can use a personal loan eligibility calculator to check whether you will qualify for a certain loan amount. In case you don’t; there are many ways to improve your eligibility for further applications. Take a look.
1. Ensure to Meet the Basic Eligibility Criteria for Personal Loans
It is a good idea to check the personal loan eligibility criteria for different lenders. Try to avoid wasting time and efforts in applications without checking this crucial aspect. Some of the common terms in the eligibility criteria are as follows.
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Personal Loan Eligibility Criteria |
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Self-employed Applicant |
Salaried Applicant |
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Age Group |
25-65 years; at the time of loan maturity |
23-60 years; at the time of loan maturity |
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Credit Score |
750 and above |
750 and above |
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Work Experience |
Business must be in existence for at least 3 years |
At least 1 year work experience, with 6 months at current the organisation |
Some of these terms may differ across different loan providers. Apart from these, there are many other factors considered.
2. Maintain a Good Credit Score
Ideally, a CIBIL score above 700 is considered good by lenders. A good CIBIL score will increase your chances to gain competitive interest rates and proper loan amount. Here are some ways to improve your credit score:
- Repay outstanding loan amounts and current EMIs on time
- Pay credit card bills on time and in full.
- Limit credit utilisation ratio.
- Avoid applying to multiple lenders at one time.
3. Pay Attention to Your Employment History and Income Stability
One of the most important criteria for personal loan eligibility is your repayment ability. Lenders will look into your employment history, whether you have changed jobs frequently in the past. By ensuring you have job stability you can assure the chances of loan approval. Moreover, you will need to meet minimum income requirements, based on your location. Try to have an alternative source of income, in case your salary doesn’t meet the requirements.
4. Choose Your Loan Tenure Carefully
If you choose the right tenure, you can improve your repayment ability. This is something that the lender will consider to approve your application. This is why try to search for flexible loan tenure; ranging from 6 to 60 months. Remember, that longer tenures mean smaller EMI amounts. On the other hand, a shorter tenure means lower interest outgo. Use a personal loan EMI calculator to make an informed decision.
5. Review Your Credit Report
Lastly, review your credit report for any errors and inconsistencies. Errors can stand in the way of loan approvals.
Look for personal loan providers with digital KYC and disbursal capabilities, to get faster loan approvals and money credit.
