Why and how to improve your personal loan eligibility in India

Unlike earlier times, when achieving financial stability was easier, it has now become extremely difficult due to the increasing inflation rates and rising costs of living. Thus, at such times, if there arises an urgent need for capital, people are left with no other option but to borrow money from friends and family.

However, now you can easily save face in front of friends and family by choosing to apply for a personal loan via new-age banks and NBFCs (Non-Banking Financial Companies). After all, these financial institutions not only provide monetary assistance with flexible repayment tenure but that too at highly attractive interest rates.

Further, you also get access to a plethora of online tools such as EMI calculators, finance blogs, etc. Thus, you can easily dissect the complex banking jargon by reading finance blogs and calculating your instalments by using an EMI calculator. After all, an online EMI calculator helps you calculate your instalments based on your repayment tenure, personal loan interest rates, and principal amount.

However, to reduce the risks involved with lending capital, the new-age banks and NBFCs (Non-Banking Financial Companies) have set personal loan eligibility criteria that every borrower must meet to enjoy financial assistance.

The various ways through which you can improve your personal loan eligibility criteria are:

1. Create an alternate source of income

The new-age banks and NBFCs (Non-Banking Financial Companies) greatly scrutinize borrowers’ income sources to ensure that they are timely able to repay the loan amount. Thus, before opting for a personal loan in India, ensure that you have a steady source of income and have been working in your company for at least 2 years. 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.

2. Work on your credit profile

Another major factor that determines your personal loan eligibility criteria is your credit profile. Your credit profile is a combination of your credit history, credit utilization ratio, etc. Timely repay all your credit card bills and EMIs on time to ensure that you easily qualify for a personal loan at the lowest possible interest rates. You can easily calculate your personal loan interest rates by using an online EMI calculator. After all, an EMI calculator helps you compute your interest rates based on your repayment tenure and principal amount.

3. Improve your credit score.

A credit score is a 3-digit numerical figure given out by the credit rating bureaus of India based on your type of credit account, repayment history, etc. Further, CIBIL is one of India’s Leading credit rating bureaus that provides credit scores and its range is between 300 and 900. Also, the higher your credit score, the better your personal loan eligibility criteria in India. You can easily improve your credit score by opting for different types of credit accounts such as long-term credit accounts, short-term credit accounts, 2 credit cards, and repaying the EMIs on time.

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