HOW TO EFFECTIVELY IMPROVE YOUR PERSONAL LOAN APPROVAL CHANCES?

HOW TO EFFECTIVELY IMPROVE YOUR PERSONAL LOAN APPROVAL CHANCES?

Many people can avail of a personal loan. This loan can be used for various purposes, from planning a vacation to renovating your house, consolidating debts, and planning a wedding. These loans are usually unsecured loans which means that the borrower does not have to deposit any of his assets as collateral or security to the bank or the moneylender. However, an unsecured loan is not beneficial for a bank or a money lender as it is risky for the creditor. Therefore, the rate of interest is higher in the case of a personal loan. Also, getting your personal loan approval may be sometimes difficult too.

Following are some of the steps by which you can increase your chances of acquiring a personal loan: -

ANALYZE YOUR CREDIT SCORE BEFORE APPLYING FOR A PERSONAL LOAN- Check your credit score before applying for a personal loan. A credit score measures your ability to repay the loan, and it is the measure of your creditworthiness. This means, higher the credit score you possess, and the greater are the chances that your loan application will be accepted. An ideal credit score is around 750 if you want to avail a personal loan easily. However, if you have a credit score lower than 700, then you must wait and improve your credit score. There are a lot of ways in which you can improve your credit score. For example, it can be improved by paying off your existing debt, by paying all of your bills on time, not maxing your credit cards, etc.

DO NOT TAKE MULTIPLE LOAN APPLICATIONS- Do not make multiple loan applications to the different money lenders, hoping that at least one of the loan applications will get accepted by the bank. It will make you appear desperate for credit, and it gives a bad impression that you need more than one loan to pay your debts and things like that. Also, if any of your loan applications will not get approved, it will reduce your credit score abruptly, and it will be difficult for you to get a loan.

TRY TO HAVE A GAP OF MINIMUM SIX MONTHS BETWEEN THE LOAN APPLICATIONS- It is suggested to have a gap of a minimum of six months between your loan applications. This is suggested because it will give a good impression of yours to the moneylender, or else he will doubt your repayment ability. You can check the amount of the EMIs to be paid every month with the help of the EMI Calculator Personal Loan.

CHOOSE YOUR MONEY LENDER CAREFULLY- It is important to do all the required research and compare different loans and banks before selecting the one. You need to compare at least four loans and then select the one which is the best for you. You should try not to choose a money lender that specialises in high-risk borrowers due to the bad credit score. You should also avoid title loans and payday at all costs. This is because these loans are designed to keep a person in permanent debt with ridiculously high fees.

BE CAREFUL OF YOUR DEBT-TO-INCOME RATIO- You should not spend more than 40% of your salary or income on paying the equated monthly instalments. So, if you are earning Rs. 25,000 per month, you should not spend more than Rs. 10,000 for paying the equated monthly instalments.

CONCLUSION:- Due to the pandemic of COVID-19, the money lenders and the banks have raised the eligibility criteria and have made them stricter. Therefore, if you have a lower credit score, you can improve it by doing certain steps, such as paying all the debts by clearing all the dues. A personal loan can be acquired by any person who fulfils the eligibility criteria of a personal loan, and a personal loan can be availed online too. Personal Loan SBI provides this option of getting a loan online.