Emergencies come unannounced, be it a health-linked ailment, any accident, or unexpected repairs. In case you are not prepared; such an emergency will not only burn a hole in your pocket but also lead to irreparable financial damage. Here is where personal loans act as a savior. Not only does it offer a significant loan sanction, but also quick approval. For the instant personal loan disbursement, you must opt for the preapproved option wherein the loan is approved on the same day of the application. In case you can wait for up to a week, then you must opt for the regular personal loan option as the interest rate is lower than the pre-approved variant. However, to qualify for the loan, you must meet the personal loan eligibility criteria set by the lender, in absence of which the loan approval might be either denied or delayed.
To check where you stand in consideration of your personal loan eligibility, use the personal loan online calculator. It is a tool that assists you get a fair idea about your EMI and repayment tenure based on your repayment capacity. Check out 5 handy tips to boost your personal loan eligibility:
- Form and maintain a strong credit score
When you apply for a personal loan, lenders factor in your credit score before approving your application as it provides a snapshot of your previous credit behavior. A credit score of 750 and above projects you as a trustworthy applicant who has repaid dues timely. This lowers the lender’s credit risk and thus enhances your personal loan eligibility. A credit score of below 750 suggests you have a poor repayment history, which makes the lender classify you as a risky applicant. This might trigger a higher personal loan interest rate or instant rejection of your loan application.
Note that you can form a strong credit score by adopting healthy credit habits like making full and timely credit card and loan EMI repayments, maintaining a CUR (credit utilization ratio) of within 30 percent, maintaining a balanced mix between secured and unsecured loans and periodically checking your credit report to detect any error for instant rectification.
- Evaluate your EMI affordability
Before you apply for the personal loan, ensure to evaluate your EMI affordability. You can know your EMI affordability by reducing your monthly mandatory expenses, existing EMIs, insurance premiums, SIP contributions, etc., from your net monthly income. Note that many of the lenders prefer your overall EMI, which must involve your new EMI for a personal loan to be within 50-60 percent of your monthly income. Once you are aware of your EMI affordability, choose the shortest tenure to reduce your interest outgo. However, while doing this avoid compromising your important contribution towards financial goals to make higher personal loan EMIs. Doing this might adversely affect your financial stability and your future financial goals.
- Avoid multiple loan applications in a short time-period
Whenever you place an application for a personal loan, lenders fetch your credit report from the concerned bureau to evaluate your credit default risk. These inquiries are termed as hard inquiries, which are mentioned in your report. Thus, making multiple credit inquiries at once does not bode well because it projects you as a credit-hungry individual, who is prone to default in the future. This not just prompts you as a high-risk applicant but also lowers your credit score considerably. Thus, it is prudent to assess your options through online financial markets, use the personal loan eligibility calculator and then apply for a personal loan that meets your requirements.
Conclusion
Similar to how risk appetite and credit assessment process can vary widely, your personal loan eligibility and rate of interest might also differ widely across lenders. Thus, make sure to approach as many lenders as possible to get the best offer before you apply for it. One of the best ways to do so is by approaching online financial markets to avail different offers available based on your income, employer’s profile, credit score etc. Opting for this route removes the risk of a negative impact on your score.
