NEW DELHI: Applying for a personal loan is easy these days. All you have to do is fill in the basic information online and in just a few clicks your loan is approved. However, on the other hand, the unsecured nature of the loan forces lenders to take a cautious approach while approving personal loan applications.
Here are five things to do that will ensure your loan application won’t be rejected.
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Credit history review
Establishing 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 sound financial habits such as timely repayment of equal monthly payments (EMI) and credit card bills, contain credit utilization rate below 30%, maintain a healthy credit mix and monitor accounts co-signed loan can help maintain a good credit rating.
Gaurav Aggarwal, Director and Head of Unsecured Loans, Paisabazaar.com, said: “Credit score is calculated based on information provided by your existing lenders and credit card issuers, and any clerical or transaction errors fraudulent can reduce your credit score, thus affecting your loan eligibility. Therefore, always be sure to review your credit report at regular intervals to identify and report erroneous information in time, if any, to 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 EMI, do not exceed 50% of their monthly income. Loan seekers should also consider monthly contributions to meet crucial financial goals, as undermining them can force them to resort to more expensive loans later on. Applicants can use EMI calculators to find out the optimal loan term after considering their existing and new EMIs, unavoidable expenses, and monthly investments/contributions for crucial financial goals.
Compare loan offers from lenders
Aggarwal said: “Banks and NBFCs offer interest rates on personal loans ranging from 10-24% per annum. It is therefore important to compare loan offers from as many lenders as possible before concentrating. on one in particular.” He added: “Borrowers should first connect with banks and NBFCs they have existing relationships with for personal loan features and offers. Then follow up 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 fees, repayment term, prepayment charges, etc.
Do not submit loan applications to multiple lenders
Each time you submit a loan or credit card application, the lender requests your credit report from the bureaus to assess your creditworthiness. These lender-initiated credit report requests are referred to as in-depth inquiries, each of which is included in your credit file and lowers your credit score by a few points. Therefore, making multiple inquiries in a short period of time can have a big impact on your credit score.
Instead of directly submitting loan applications to multiple lenders, visit online financial markets to find the optimal personal loan deal available based on your credit score, income, job profile and job description. other eligibility criteria. Credit report inquiries generated through these financial marketplaces are considered informal inquiries and have no impact on credit rating.
Stay away from frequent job changes
Another parameter often considered by lenders when assessing personal loan eligibility is the job stability of the applicant. “As 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. Hence, try to avoid doing this especially if you are planning to avail a personal loan in the near future,” Aggarwal said.
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