6 must-know personal loan tips that can rocket your approval chances
A personal loan is one of the most popular credit products. Most people like to take a personal loan for their needs and financial emergency due to its unsecured and unrestricted nature. One can use the personal loan for shopping to vacation, and children’s education fees, etc. The credit profile of one should always be ready to secure a personal loan in need. You should prepare your credit profile to take a personal loan not only from major lenders of the country but from other players as well, like IDFC first bank loan. If your credit profile is imperfect, you can take steps to make it better to apply and get a Personal loan. Here, we will discuss 6 personal loan tips that can rocket your approval chances:
Improve your credit score
A credit score is one of the major factors lenders look into when they evaluate your personal loan application. The applicant’s credit score should be good, so that lender can consider the loan application. Lenders usually consider a credit score of 750 or above a good one. If you want to take an IDFC first bank loan, your credit score should be in a good category. Personal loan applications with poor credit scores either face rejection or get a loan at a high cost to make up the lender’s risk.
Moreover, the credit score of an applicant can also impact the personal loan interest rate. Lenders often offer preferential rates to applicants having a good credit score to counterbalance the risk since they have started practising risk-based pricing. IDFC first bank loan can also be different on the basis of the applicant’s credit score. Hence, IDFC first bank loan interest rates can be low for an applicant having a high credit score, and rates could be high for applicants with a poor credit score.
You should also control your credit utilization ratio, which is the percentage you spend out of your total available credit limit. Bank considers you more dependent on credit if your utilization ratio is high, and it could be a reason for a lender to reject your loan application. It is advisable to keep your credit card utilization ratio under 30%.
Review your credit report at regular intervals
It is recommended that one should review his/her credit report at regular intervals, at least once every three months. That’s how you can have adequate time to take measures to improve your credit score if needed. Inform the concerned bureau and bank if you find any incorrect information in your credit report, as sometimes incorrect information in your credit report can make an adverse impact on your credit score. A revised credit report will automatically improve your credit score.
Other than these, consumers should review their credit reports at regular intervals; this should be a regular exercise for those planning to secure a loan in the near future. Reviewing credit reports can make them track their credit score and take steps to improve or maintain their credit scores. Consumers can get a free credit report once a year from each of the four credit bureaus in India. Online financial marketplaces are also available, where one can get his/her credit report for free with monthly updates.
Boost your Eligibility
Applicants should fulfil the eligibility criteria of lenders to get the loan application considered by a lender. Applicants should know the eligibility criteria of lenders, especially those who want to take a loan in the forthcoming. The eligibility criteria of any lender could be different depending on the applicant and loan amount. Like if you want to take a 5 lakh personal loan from IDFC first bank, and you are a salaried individual, your age should be over 23 years, and for self-employed individuals, it must be over 25 years, and their business should be have been in existence for at least 3 years.
Apart from these, to apply for a 5 lakh personal loan, an applicant has to submit documents with the loan application form, which are, as an Identity Proof: Aadhar card, Pan Card, Passport, Voter Identity Card, Driving License, for address proof: Electricity bill, Telephone bill, Ration Card, Bank Account Statement, Passport, Driving License, Aadhar card and you also have to submit some documents to prove your income, which are a statement of bank account, salary Slips, ITR, Form 16.
Debt to income ratio
Lenders consider the debt to income ratio of the applicant while evaluating the loan application. If you are spending a large part of your salary to pay off your debt, the lender will count you as a risky borrower. To take a 5 lakh personal loan, one should not spend more than 50% of income on EMIs (including new loan EMI) as spending more than that can lead you to take a loan at a high interest cost for your necessary needs.
If you want to take a 5 lakh personal loan but you are already spending a significant part of your income on EMI’s, you should first decrease your debt-to-income ratio by either pay off all or at least some of your current loans and credit card bills in full and convert credit card bills or big purchases into EMIs is also an option.
Relationship with lender
Sometimes lenders give better offer to their customers than other applicants. Hence, one should first ask his/her own lender then goes to others. Like if you need a 5 lakh personal loan, you should enquire with your own lender you shared relation with, and this relationship could be any type of saving/ current account, fixed/ recurring deposits, loan/ credit card account, etc.
Avoid switching job at regular interval
Stability is one of the major factors lenders want in a personal loan applicant. As it’s an unsecured loan, lenders want to be sure that the applicant is stable to pay the loan EMI every month. If you switch your job at regular intervals, it indicates that you are not stable, and it could make a lender disapprove of your loan application. Therefore, you should avoid switching jobs if you are preparing to take out a loan in impending.