Quick disbursal, minimum documentation, zero restriction on end-use of loan proceeds and minimum collateral requirement make personal loans an ideal borrowing option to fulfill urgent monetary needs. However, the unsecured nature of personal loans makes lenders follow a cautious approach during the loan approval process.
Explained here are five crucial checkpoints clearing which your chances of personal loan approval can increase:
Review your credit profile: Credit score is one of the first filters used by the lenders to assess the applicant’s creditworthiness for availing a personal loan. Generally, applicants with credit score of 750 and above have higher chances of getting loan approval. Hence, one must strive towards building and maintaining a strong credit score. Consider adopting healthy financial habits like timely repayment of EMIs and credit card bills, containing credit utilization ratio within 30%, maintaining a healthy credit mix, and also monitoring co-signed loan accounts, etc.
Also, given that your credit score is computed based on the information provided by the lenders and card issuers, any clerical error on the part of the lender or card issuer or any fraudulent credit transaction or application made in your name can pull down your credit score and loan eligibility. Hence, review your credit report at periodical intervals to identify and report wrong information, if any, to the credit bureaus and lenders for rectification. A rectified credit report will automatically report a higher credit score.
Choose tenure according to your repayment capacity: Lenders assess your repayment