When in a cash crunch, a personal loan can help you bridge the gap fuss-free. To get the funds, you can easily apply on personal loan apps or financial websites. Since it has no end-use restrictions, you can use it for any urgent needs. This includes:
- Home renovation
- Paying medical bills
- Planning a dream holiday
- Financing further education
- Consolidation of loans
Prior to starting the application journey, take a step back and assess your eligibility. Financial institutions assess applicants using specific criteria to determine if they can pay back the loan comfortably and on time. Making it through this assessment, means keeping the factors given in mind.
Common Eligibility Criteria
While choosing a personal loan, you should understand the dynamics that influence your eligibility. These are:
- Your geographic location
- Your job security
- Your income range per month
- Your credit score and credit history
- Your existing debts
If these factors align with your lender’s eligibility criteria, you can easily get an instant personal loan. Understanding the criteria will help you to save time during the process and improve your chances of approval.
Why Lenders Check Eligibility
By following a strict criteria, every bank or non-banking institution is able to weed out any high-risk applicant. With this step, lenders check whether you are a good fit for the loan or not. Here is an overview of the most important factors.
- Reduce Their Risk
Your credit score shows your attitude towards credit management. If you are someone with a good score, this means that you are less likely to default on your loan. As such, you may get approval faster and at better terms than your friend with a low score.
- Analyse Your History
Lenders also check your credit history to check your past behaviour. This also showcases how you have dealt with your previous loans or credit cards.
- Know Your Debt Obligation
Lenders also try to find out whether there are any existing debts in your name. Paying two EMIs at a time can be hard for most. Lenders consider this factor as well.
- Check Your Financial Capacity
Your employment and job stability shows whether you can afford to repay this loan on time every month. Generally, individuals with steady jobs, such as government employees, get loans easily.
Once lenders have checked your eligibility, they will decide on whether to approve your loan or not. They will also decide on factors like interest rates, maximum loan amount, tenure and more.
What Are The Eligibility Criteria
Here are all the general eligibility terms you can refer to:
- You should be an Indian citizen
- Your age should be between 21 years and 60 years
- Your monthly income should be as per the lender’s requirement
- Your credit score should be 750 or above
- You should be employed with a recognised organisation for at least 2 years
These eligibility criteria are generic, and the specifications depend on the lender. For example, some lenders or personal loan apps may give loans a credit score below 750 as well at a higher interest rate. Below is a list of credit scores and how they may reflect to the lender.
| Credit Score | Remark | Chances of Approval |
| Below 300 | Poor | No chance of approval |
| 300 to 550 | Very low | Need to improve the score |
| 551 to 620 | Low | Low chances of getting approval |
| 621 to 700 | Fair | Can get a loan at a high interest rate |
| 701 to 749 | Good | Can get quick approval |
| 750 to 900 | Excellent | Eligible for approval with a comfortable repayment |
Required Documents For Personal Loans
Once you know you are eligible for a personal loan, the lender will verify your creditworthiness and eligibility. For this, you will have to submit these documents to your lender:
- ID proof
- Address proof
- Income proof
- Bank statements
- Passport-size photos
How to Apply for a Personal Loan
To apply for the loan, follow these steps:
- Step 1: Check your eligibility
- Step 2: Compare the interest rates, repayment tenure and other charges involved
- Step 3: Get your documents ready
- Step 4: Find the application form and fill it out correctly
- Step 5: Submit your application with your documents
- Step 6: Wait for approval
On approval, the loan will be disbursed, and the amount will be credited to your bank account. As you can see, everything starts with meeting the eligibility criteria, especially running a credit score check. With a good score, you can easily get an instant personal loan. The OneScore app can be a great option for checking both your Experian and CIBIL scores for free.
All you have to do is download the OneScore app and get your credit score and credit report. It also comes with insightful reports, using which you can elevate your credit score to improve your eligibility.
You can also see all your existing loans and credit cards, which can help you understand your monthly expenditures. Then with the Score Planner facility, you can reach your desired credit score goal without constantly worrying about your finances. Download the app now to start your borrowing journey smartly!
