4 ways to improve your personal loan eligibility in India

The inflation rates in India have greatly increased in the last few years, and because of this, it has become extremely difficult for the middle-class Indian population to attain financial wellness. Further, at such times, if there comes a financial or medical emergency, people are left with no other option but to lose face by borrowing money from friends and family.

However, thanks to the availability of personal loans from new-age banks and NBFCs (Non-Banking Financial Companies) people can now easily borrow financial assistance without losing their dignity. Further, the personal loan interest rates charged by the new-age banks and NBFCs (Non-Banking Financial Companies) are way lower compared to the ones provided by traditional financiers.

However, to reduce the risks associated with lending capital, financial institutions across India have set personal loan eligibility criteria that every borrower must meet. Although, these eligibility criteria are different for every bank and NBFC (Non-Banking Financial Company); however, through extensive research, we have found a few common criteria and 4 ways through which you can improve them!

1. Work on your Credit score

Your credit score is unarguably one of the most important factors in determining your personal loan eligibility in India. This credit score is a 3-digit numerical figure given out by the credit rating bureaus and is based on your creditworthiness, credit profile, etc. Further, CIBIL is one of the leading credit rating bureaus and its range is between 300 and 900. A good example of a CIBIL score is anything above 750; further, the higher your credit score, the better your personal loan eligibility. You can easily improve your credit score by timely repaying all your current and pending instalments.

2. A good mix of credit profile

Although, a majority of people often overlook their credit profile; however, banks and NBFCs (Non-Banking Financial Companies) greatly scrutinize this aspect. You can easily improve your personal loan eligibility by maintaining a good mix of credit profiles. Further, an example of a good mix of credit profiles is having 2 credit cards, a short-term credit account, a long-term credit account, etc.

3. Creating an alternate source of income

When approving a borrower’s personal loan application, the new-age banks and NBFCs (Non-Banking Financial Companies) greatly gauge their source of income. Thus, before you think about opting for an instant loan in India, you must ensure that you have a steady source of income. You can further improve your personal loan eligibility criteria by creating an alternate source of Income. This alternate source of income can be the rent from your second property or your spouse’s income.

4. Avoid applying for multiple loans simultaneously

This is one of those mistakes that a majority of us make when opting for a personal loan in India. After all, when we are desperate for capital, we often make rash decisions that cost us a lot in the longer run, and applying for multiple personal loans at the same time is one such example. After all, when you apply for multiple personal loans simultaneously, the financial institutions pull up your credit report which results in hard enquiries. Further, these hard enquiries harm your credit score.

I specialize in writing finance blog; Particularly, topics related to personal finance, loan, insurance policy and financial management.