You may require money for varied reasons, including a wedding, education, vacation, medical emergency, debt consolidation, or home renovation. When you fall short of cash or need money for a particular purpose, you may approach lenders to avail . This is what we call a personal loan.
The demand for personal loans has increased a lot over the last few years, perhaps due to their easy availability, fast approval, no collateral requirement, and no end-use restrictions. However, when you need money and approach a lender for a personal loan, they consider several factors before approving your loan application, including your income, employment, credit history, and repayment capacity. If your loan application gets rejected, it not only wastes your time and effort but also reduces your credit score. Therefore, before applying for a personal loan, use these pro tips to improve your personal loan eligibility and then apply with better chances of approval.
1. Improve Your Credit Score
If you want to get a personal loan, you need to have a credit score of 725 or above. It is a 3-digit number that lenders check to determine your creditworthiness. The higher the credit score you have, the better will be your personal loan eligibility. You can improve your credit score using the following tips:
- Stay consistent with your credit card bills and loan EMI payments
- Keep your credit utilisation ratio under 30-40%
- Retain your old accounts and credit cards
- Diversify your credit profile with different account types, like secured, unsecured, long-term, and short-term loans
- Check your credit report for any errors and get them rectified
2. Prepare Your Documents
Although personal loan lenders have minimal documentation requirements these days, you still need to prove your identity, income, and address. To apply for a personal loan from Clix Capital, you need the following personal loan documents:
- Duly filled online application form
- Recent passport size photograph
- Identity proof like Aadhaar Card or PAN Card, or government ID for government employees
- Address proof like Aadhaar Card, Voter ID, passport, driving license, etc.
- Income proof, including your last month’s payslip or current year’s Form 16
If your KYC is updated with Aadhaar and PAN, you do not need to upload or submit these documents anywhere. You can get them verified online, and if everything goes smoothly, you can get your approval in as little as 15 minutes*.
3. Check the Lender’s Eligibility Criteria
Personal loan lenders have simplified their eligibility criteria to a great extent to make finance available to all. However, it’s crucial to check the lender’s personal loan eligibility conditions so that you do not end up getting a rejection due to a negligible reason. To apply for a personal loan from Clix Capital, these are the conditions you must fulfill:
- You should be 25 to 58 years of age
- You must be a citizen of India
- You should be a salaried individual drawing a salary of at least ₹ 25,000 every month
- You should be working with your current employer for at least 6 months, and you should have a total work experience of at least 12 months
4. Reduce Your DTI Ratio
If your debt repayments exceed more than 40% of your monthly income, then you have fewer chances of getting personal loan approval. Consider clearing off your debts before applying for a new personal loan. Doing this will not only increase your chance of getting loan approval but also make repayments easier for you.
5. Keep Your Credit Utilisation Ratio Down
The credit utilisation ratio is the percentage of your monthly credit limit you use up on average. If you use up most of your available credit, lenders perceive you as a credit-hungry borrower and end up rejecting your loan application. Keep your credit utilisation ratio lower than 30-40% to increase your chances of loan approval at competitive interest rates.
6. Apply for the Right Loan Amount
You must evaluate your needs and calculate your expenses before applying for a loan. Applying for a high loan amount unnecessarily will decrease your personal loan eligibility and increase your loan cost. Consider your income, DTI ratio, lifestyle, and other financial obligations before finalising the loan amount you want to apply for.
7. Do Not Make Multiple Loan Applications Within a Short Time
When you need money, you may consider applying for several loans, hoping that you may get approval from at least a few of them. However, this is not a wise move to make. When you apply for several loans, all those lenders simultaneously pull hard inquiries on your credit report and know about the other applications you have recently made. As a result, you present yourself as a credit-hungry borrower, and they ultimately reject your loan application. Besides that, your credit score also gets reduced due to several loan rejections within a short time.
8. Wait for 6 Months Before Making a New Loan Application
If you have taken a loan recently, do not apply for another loan before at least 6 months. Otherwise, you may project yourself as a credit-hungry borrower who needs to borrow money for every little expense.
9. Fill Out the Application Form Carefully
Be extra careful while filling out your loan application form. Even a single mistake or discrepancy in the details provided may cause suspicion, and the lender may decide to reject your loan application.
The technological revolution in India and the easy availability of the internet have made it extremely easy for borrowers to apply for personal loans online. NBFCs like Clix Capital have made it simpler than ever to apply for personal loans. We offer personal loans of up to ₹ 25 lakhs at competitive interest rates with flexible repayment terms. Follow the pro tips mentioned here to improve your personal loan eligibility and get the required funds within 15 minutes*.
You can also reach out to us at email@example.com or call us at 1800 200 9898
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