If you're seeking for a personal loan, you'll need to meet a set of eligibility requirements imposed by lenders. Personal loans are unsecured, which means you don't have to put up any collateral with the lender, which is why lenders look at a variety of factors to see if you're creditworthy. It's worth noting that lenders need to know a consumer's credit forecast in order to make a judgement. Lenders use risk-based pricing to decide the interest rate on your loan after reviewing your profile against a set of characteristics. Individuals who have previously demonstrated a high risk of mismanaging their credit may find it difficult to obtain loans and will often be charged a higher rate of interest than those who have a clean credit history.
Personal Loan Eligibility: Here is how lenders determine if you are eligible for a personal loan:
Employment
Your employment status, whether self-employed or salaried, is the first factor that lenders consider. Lenders like to give personal loans to people who have a steady source of income.
Your credit score
For lenders analysing your loan application, your credit score is the most significant factor. Your credit score is a number that indicates how you've utilised credit in the past and how healthy your credit is right now. The credit score is calculated using information from your credit report and is influenced by a number of factors, including your total outstanding debt, the number of debt(credit) accounts you have, the duration of your credit history, and previous loan/credit card repayments. Fintech lenders require a credit score of 600 to qualify for personal loans.
Your repayment history
Your repayment history is the next important eligibility factor that lenders scrutinise thoroughly. Your repayment history reveals how consistent you've been in making your loan payments in the past. It highlights instances of late payments and defaults so that lenders can make an informed lending decision based on your credit management history. Any kind of default can affect your prospects of getting a loan or a credit card.
Employment Experience
The length of time you've worked is referred to as your employment experience. Many private banks require candidates to have a minimum of 1-2 years of work experience, however Fintech lenders accept applicants with only 6 months of work experience. Working for a single employer for a long time boosts your creditworthiness, and if your employer is a well-known global corporation, that's even better.
Age
Most lenders need that you be between the ages of 23 and 55 years old. You can still qualify for a personal loan with a Fintech lender if you are at least 23 years old and have no credit history.
Income
Another key criterion that determines not just your loan eligibility but also the amount that lenders will provide you is your monthly income. Lenders have different income qualifying criteria - some Fintechs allow you to qualify with an income of Rs 18,000 per month, while certain private banks require an income of Rs 25,000 or more.
Your employer categorization
Following the evaluation of a company's risk profile, it is categorised and assigned a letter grade ranging from A to D. Individuals working for organisations classed as Category "C" or "D" frequently find it difficult to obtain loans from major credit institutions. However, with the introduction of Fintech lenders to the market, this situation has altered, and people working for uncategorized or unlisted businesses can now get rapid credit. To avoid rejection, it's better to approach a Fintech lending institution if you work for an unlisted or uncategorized employer.
Conclusion
There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Personal Loan Online Apply if you have any more.