Can you get a personal loan? Check eligibility criteria first | Mint

Personal loans are helpful for fast money if you need such speed to cover medical costs, house improvement, or that dream vacation. Not every person, however, is qualified to get a personal loan. A number of criteria must be met before the lenders determine if the borrower is credit worthy. Knowing these characteristics helps you better prospect of qualification and enables good financial decisions.

Understanding personal loans

A personal loan is an unsecured loan provided to a borrower who can utilise the received amount for any kind of purpose that may have arisen, or perhaps health expenditures, house renovation work, education, travelling, and so on. Thus, an unsecured loan benefits a number of people. Nonetheless, there is a demand for a higher interest rate for this type of unsecured loan as no security exists against the loan.

Understanding eligibility criteria for personal loans

Lenders often consider a variety of factors when determining eligibility for a personal loan in India. Age, income, employment stability, credit score, and existing debt are all important eligibility factors. Lenders frequently prefer people between the ages of 21 and 60 who have a steady income. A strong credit score is important since it reflects your creditworthiness and payback history. Meeting these eligibility requirements boosts your chances of obtaining a personal loan with favourable terms.

Eligibility criteria for personal loan

Here is the general outline of the basic requirements:

• Nationality: Citizen of India.
• Age range: 21–68 years.
• Employment: Salary (public/private/MNC) or self-employment.
• Credit score: Preferably 750 or higher.
• Income: The minimum monthly income is ₹5,000, varying by city of residency.

Each bank or financial institution might have its specific or even somewhat different requirements. For more details, check the lender’s website.

How to improve personal loan eligibility

1. Monitor your credit score: To improve or maintain your credit score, make sure you check your credit report for any flaws and pay on time.

2. Stable income stream: A steady income and a work history is a very sound sign of stability.

3. Pay off lower existing debts: This simply reduces previous debt, so that you can avoid debt burden and do not get into debt traps, and this helps to increase the DTI ratio.

4. Meets the basic criteria: Make sure you are eligible under the lender’s basic age, income, and residency requirements before applying.

In conclusion, meeting the eligibility criteria is a must before taking out a personal loan. Any lender is looking for a good credit score, secure income, and minimal debt. Besides that, with a legit lender and some research on a loan, such as an interest rate, processing fee, and repayment options, you would be prepared to make the right decision on your money matters.

Applying these guidelines when borrowing responsibly will help you make sure that you can use personal loans effectively in your pursuit of financial goals.