Financial emergencies can come knocking on an individual’s door at any time. In such situations, it is essential to have an emergency corpus saved to cover the immediate expenses. However, if an individual is facing a cash crunch, one effective solution to deal with the problem is to apply for an instant personal loan. Personal loans are one of the most preferred forms of credit among borrowers, given the freedom these loans offer in terms of end usage. However, before applying for this loan, one needs to make sure that they have a profile that will give a boost to their personal loan eligibility.
In order to improve personal loan eligibility, keep the following tips in mind:
- Pay off any existing debt before applying for a personal loan
If an applicant is already paying off numerous existing loans, they might not have much room to take on another personal loan. This lowers their eligibility for a personal loan and even if they do get approved for one, it is quite likely that the lender would charge a high personal loan interest rate. This is why it is considered best to clear off any existing dues before applying for a personal loan as this can improve one’s personal loan eligibility.
- Keep a clear repayment record and a good credit score
Every lender is going to check an applicant’s credit score and repayment history before approving their loan application. In order to improve their eligibility for a personal loan, an applicant should have a clear repayment record without any defaults and maintain a credit score of at least 750.
- Opt for a longer tenure to repay the loan
Choosing a suitable repayment tenure is one of the most important aspects that one needs to keep in mind while applying for a personal loan. Some borrowers might prefer to opt for short repayment tenures in order to save money on interest payments. However, if an applicant is looking to boost their eligibility for a personal loan, they should opt for a long repayment tenure. This is because a long repayment tenure will make Equated Monthly Instalment (EMI) payments easier for the borrower, which in turn reduces the risk for the lender.
- Mention any additional sources of income
An applicant’s monthly income is one of the most important factors that lenders consider while deciding whether to approve or reject a loan application. If an applicant has an alternate source of income such as rental or freelance income, they should provide a record of it to the lender along with their loan application as this can effectively boost their eligibility for a personal loan.
These tips can help in boosting an applicant’s eligibility, thus increasing their chances of getting favourable loan terms from lenders. Also, do keep in mind that lenders could have varying eligibility criteria, so make sure to check with the lender about its specific personal loan eligibility criteria before applying for the loan.