A personal loan comes in handy when you are in need for an unaccounted expense and which cannot be deferred or adjusted from future income. Or it could be required to bridge that gap in the requirement that you have but falling short on some funds. Whatever may be the reason, but a personal loan is a quick way to raise funds. Also the flexibility to use the loan proceeds for any need that you may have also makes this product a highly sought after loan.
But being a loan where no guarantee or security is provided by the borrower, the lending institutions take far more conservative view on these applications. The borrower’s personal and credit profile are the two factors that impact the outcome of loan applications. Following is the list of 7 steps that you should follow to be able to secure that personal loan. Failing the following may lead to you looking for a personal loan for low CIBIL score.
The first three points pertain to your credit profile and the other four refer to the personal profile
This is the first gate. Only once the application is able to clear this gate will the same reach the underwriting desk for a decision. Generally a minimum score of 730 is required for a personal loan applicant to pass through the very first level. These days you are entitled to a free CIBIL report. So do check your score before you even initiate the loan application. Checking the report will give you the confidence that your application will at least get reviewed by the bank. Applying for a loan with a low score will not bear any result.
If by any chance you have been one of those who went through a financial crisis and have settled one or more accounts, please take a note that your loan request is bound to get rejected. This would be irrespective of you having a high score (while it may be surprising, but fact is that there is still a possibility to have a score above 750 despite having a settlement in past). You would need to have a clean report with no negative flag before you apply for that loan.
Applying for a loan with multiple lenders is another factor that may lead to rejection. While your intentions may just be to get the best deal, it may turn out to be the reason leading to not accessibility to credit. Not only are multiple applications viewed negatively by the underwriters, it also has the potential to have a negative impact on your credit scores.
Your income and current debts play an important role. So check out on the loan amount that you would be eligible for. As a thumb rule, 50% of the net income is what the banks take as your capacity to service all loan EMIs and credit card balances. So if your income is 50,000 per month, you will have a total serviceable pool of funds for up to 25,000 rupees. This will include your new loan EMI as well. So if your current obligations total up to 20,000 your new loan EMI cannot be more than 5,000 per month.
In case you have been changing the jobs frequently and or have low experience your loan application may get rejected. Both these are not seen favorably by the banks and for an integral part of assessment and underwriting process.
You would need to ensure that the information being furnished by you is correct and complete. Incorrect and incomplete information furnished on loan application form is surely going to delay the process and can even lead to rejection.
Each bank asks for income and basic KYC documents from the borrowers. You must have all these documents ready with you. In case of all required documents not getting furnished, the loan application is bound to get rejected despite earlier approval.
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