NEW DELHI: Applying for a personal loan is easy these days. You just need to fill in the basic information online and with a few clicks, your loan is approved. However, on the other hand, the unsecured nature of the loan prompts lenders to take a cautious approach when approving personal loan applications.
Here are the five things to follow that will ensure that your loan application will not be rejected.
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Credit history review
Building and maintaining a strong credit history is the first step towards improving the chances of loan approval. Usually, if you have a credit score of 750 and above, the chances of getting a loan are higher. Adopt healthy financial habits such as timely repayment of Equivalent Monthly Payments (EMIs) and credit card bills, a credit utilization ratio of less than 30%, maintaining a healthy credit mix, and monitoring co-signed loan accounts can help maintain a good credit rating.
Gaurav Aggarwal, Director and Head of Unsecured Loans, Paisabazaar.com, said: âThe credit score is calculated based on information provided by your existing lenders and credit card issuers, and any clerical or transaction errors. fraud can lower your credit score, thus affecting your loan eligibility. Therefore, always be sure to review your credit report at regular intervals to identify and report incorrect information on time, if any, to the credit bureaus and lenders for rectification. “
Choose the duration according to your repayment capacity
Lenders prefer to lend to applicants whose loan repayment obligations, including IMEs, do not exceed 50% of their monthly income. Loan seekers should also consider monthly contributions to crucial financial goals, as weakening them may force them to resort to more expensive loans later. Applicants can use the EMI calculators to determine the optimal loan term after taking into account their existing and new EMIs, unavoidable expenses, and monthly investments / contributions for critical financial goals.
Compare loan offers from lenders
Aggarwal said: âBanks and NBFCs offer interest rates on personal loans ranging from 10-24% per annum. So it is important to compare loan offers from as many lenders as possible before focusing. on an individual “. connect with banks and NBFCs with which they have existing relationships for personal loan features and offers. Then follow it by visiting online financial markets to compare loan options available from other lenders. While comparing lenders do not limit loan comparison to interest rates Also compare other loan features such as loan amount, processing fee, repayment term, prepayment charge, etc.
Don’t submit loan requests to multiple lenders
Whenever you submit a loan or credit card application, the lender requests your credit report from the agencies to assess your creditworthiness. Such credit report requests initiated by the lender qualify as serious investigations, each of which is included in your credit report and lowering your credit score by a few points. Therefore, making multiple inquiries over a short period of time can have a huge impact on your credit score.
Instead of submitting loan applications directly to multiple lenders, visit online financial markets to find the optimal personal loan offer available based on your credit score, income, job profile, and job profile. ‘other eligibility criteria. Credit report requests generated through these financial markets are considered indirect requests and do not affect the credit rating.
Stay away from frequent job changes
Another parameter often taken into account by lenders when assessing eligibility for a personal loan is the job stability of the applicant. âSince the practice of changing jobs quickly can be seen as a sign of career instability by lenders, they may be reluctant to lend to applicants who change jobs frequently. Therefore, try to avoid doing it, especially if you plan to take out a personal loan in the near future, âAggarwal said.
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