During the current financial crunch, it has become easier to avail funds through personal loans. Lenders are providing personal loans instantly with eased restrictions. Personal loans are among the best choices to gather funds in case of an emergency. The loan process has become faster, and it requires much less time and minimal documentation. However, you can boost your personal loan eligibility further by keeping a note of various factors that affect it.
By ensuring that you meet the eligibility criteria of a lender before you apply for a personal loan online. You can boost the process and eliminate any hurdles that might show up during the process. After all, unsecured personal loans are provided without collateral, and it makes the eligibility criteria as an imperative factor for lenders while considering your loan application. This article takes you to the best five financial habits that positively impact your personal loan eligibility.
Personal Loan Eligibility Criteria
Check your CIBIL Score
Credit history is the most important parameter when it comes to checking eligibility for a personal loan. The CIBIL score is a measure and indicator of your credit history. Lenders check your CIBIL score before going further with your loan application. You can check your credit score in the Credit Information Report (CIR). Your credit report tracks down your past credit information. It is a complete record of debt repayment history and loan inquiries from the past. A CIBIL score can range between 300 and 900 while maintaining a score of 700 is considered as good by lenders.
Make Timely Repayments
If you are punctual with repayments, it shows your credibility and financial health in a positive light. Lenders will believe that you have control over your finances and have enough cash flow that can help you repay the money on time. So, make sure that you pay your loan EMIs, credit bills, and other postpaid bills before the due date. The habit of making regular payments to the lenders will improve your credit reports.
Take a Personal Loan when Necessary
Making too many inquiries for availing a personal loan in a short time can impact your credit history. Frequently seeking a loan would indicate your financial instability and your lenders might think that you spend money recklessly. So, to make lenders believe you can manage your finances, apply for a loan when necessary. It can have an impact on the interest rate you receive, and you might even become ineligible for the loan.
Don’t reach your Credit Limits
Even when you have a good credit limit, try to avoid taking credit unnecessarily. Try to maintain a low credit utilization ratio. It is the amount of debt in comparison to the credit limit. Especially when you are using a credit card for making purchases. Having high credit utilization lowers your credit score. So, be wise while using your credit limit.
Avoid Getting Multiple Credit Cards
Having multiple debts to repay at the end of the month takes a dig on your CIBIL score. You might forget one bill payment, and it might get reflected in your credit report as default or delayed payment. So, it is better to stick to your old credit cards so that it gets easier for you to manage the bills.
Getting eligible for a personal loan is getting easier. You can easily apply for a personal loan online through the lender’s website or mobile application. To make sure that you fulfill the personal loan eligibility criteria, make sure to check your credit reports, repay existing debts on time, avoid reaching your credit limit, and apply only when necessary. It will help improve your credit history, and you will be eligible for a loan at lower interest rates.
Moreover, you can check your personal loan EMI online. It will help you get an idea about the interest that you would have to pay for the loan. You can improve your credit score over time, so try to build a good credit history that can support your claim for availing a personal loan. For making your loan process seamless, make sure to follow the points mentioned above.