Published on October 27th, 2020 | by Bibhuranjan0
What Affects Your Personal Loan Approval
Whether it be for immediate needs or for plans set out sometime in the future, every individual and family finds themselves in the need of quick and easy financial assistance. While there are a variety of financial products in the market to serve this purpose, availing a personal loan often proves to be the most efficient one.
However, while the loan application process for personal loans is relatively simple, potential borrowers must remain informed about the various factors that can affect their chances of loan approval. Here is what you need to know:
Factors Affecting Personal Loan Approval
Personal loans are simple, straightforward and quickly disbursed. But in order to get your loan approved without a hitch, there are a few things that you must keep in mind. Here is a closer look at some of the most important factors that affect your personal loan approval:
- Credit Score – While not the only deciding factor in your personal loan approval process, your credit score can have quite an important part to play in it. Since personal loans are unsecured, lenders have to rely on credit scores as a method of assessing the credit worthiness of the borrower. For the most part, it is recommended to have a credit score of 750 or above to ensure ease of loan approval.
- Monthly Income – Personal loans are meant to serve the financial needs of a wide variety of borrowers. Having said that, the personal income of an individual, as well as its regularity, is still considered a fair indicator of his or her loan repayment capacity. Hence, it is yet another factor that plays into your loan approval process.
- Existing Debt –Even if an individual has a stellar credit score and a regular income source, any existing debt obligations might make it difficult for him to make repayments for a new personal loan. Hence, existing debt is another factor analyzed by lenders to assess the personal loan approval of a potential borrower.
- Eligibility – In order to ensure that a potential borrower can adequately make his or her repayments, most lenders set a specific criteria that needs to be fulfilled in order to gain a loan approval. These eligibility criteria are generally quite broad and include requirements of citizenship, income and age. Hence, an inability to fulfill one or more of these criteria can lead to your loan application being rejected.
While these factors can help you secure the personal loan you require, you must also ensure that you have your ideal EMI amount figured out before the application process is even started. An efficient method by which you can achieve this is by using a personal loan EMI calculator, which is a simple, user-friendly tool that is easily available online.