A personal loan is a collateral-free loan, which means you can easily avail of it without giving collateral. But still, there are specific eligibility criteria that you should pass to apply for a personal loan.
Lenders always take a close look at borrower eligibility criteria before approving their loan request. In this post, we are going to tell you the ways to increase personal loan eligibility.
- Nurture your credit ratings.
You can easily keep your credit score good if you repay the card payment or loan on time. But keeping a good credit score has become challenging if you breach the magic number of 725. Lenders prefer personal loan applications from borrowers who have a credit score of 725 or more.
So, when your credit score reaches 725, ensure that you do not default on payments or cards. It is suggested to check your credit score one or two times a year to ensure that lenders transfer the recent records to the credit rating bureau.
- Monthly income or loan amount
As we tell you, the lenders specify the minimum monthly income to ensure that the personal loan borrower can repay the loan. However, if your monthly income is higher than the specified minimum income of the lender, you can negotiate the interest rate of the loan.
On the other hand, if your monthly income is around the threshold, you can reduce the loan amount to increase your eligibility and get the best interest rates. While evaluating the repayment ability and monthly income, it is suggested to decide on your loan amount.
- Apply for a personal loan while you are young.
Age is an important criterion for determining the interest rate on a personal loan. Lenders also consider your age before approving your personal loan request. Although, unlike a loan against property or home loan, a personal loan is not considered a long-term loan. Lenders mostly prefer young borrowers because they have more time to repay the loan amount.
For example, if your age is 57, you only get the time of 3 times to repay the loan amount. On the other hand, if you fall under the minimum age bracket, you get a long time to repay the loan. Keep in your mind that eligibility for a personal loan and the probability of getting a lower interest rate are also based on age.
- The income stability
The decent income of borrowers makes them eligible to get a personal loan. If you have a stable income, you get the loan at a lower interest rate.
Generally, lenders consider the borrower’s eligibility based on their income. They can easily approve the loan application of professional or full-time part-time borrowers. If you are unable to show your stable income, it is suggested to submit proof of your bank deposits.
Before applying for a loan, you should follow all the above tips and make a high chance of getting personal loan approval.