Personal Loan Eligibility: Are you thinking of taking out a personal loan? But for this, some qualifications are required for the applicant. Do you also want to know what are the eligibility criteria to take a personal loan? Then find out for details. No one can say when money is needed. Maybe the emergency has come but there is not much money. In that case, no one has the option but to borrow money or take a loan.

Many customers who apply face challenges, but the good news is that you can improve your loan eligibility by taking some smart steps. Strengthen your credit profile, reduce the outstanding loan amount and keep your income stable to increase your chances of getting a loan on favorable terms.

Ways to improve your personal loan eligibility

1. Keep your credit score high

Your credit score plays a vital role in deciding whether you will get a personal loan or not. A score of 685 or above increases your chances of getting a loan approved. A good credit score can also help you get a higher amount as a personal loan at better interest rates . Let’s find out how to improve it:
Pay all your EMIs and credit card bills on time.
Avoid applying for many different loans in a short period of time.
Keep your credit utilization ratio below 30%.

2. Use a personal loan eligibility calculator

Before applying for a personal loan, use a personal loan eligibility calculator to find out your loan eligibility. This tool can help you estimate the loan amount you can get based on your income, existing liabilities, and credit history.

3. Good job history along with stable income

Financial institutions give more importance to applicants who have a stable income and have been working in their current job for at least six months. If you run your own business, then having a stable income as well as maintaining a good financial record increases your chances of getting a loan.

4. Reduce your existing debt

A high debt-to-income (DTI) ratio has a negative impact on your eligibility. You can reduce your DTI in these ways:
Before applying, pay off any outstanding loan or credit card dues.
Avoid taking multiple loans at the same time.
Balance your existing financial liabilities by increasing your income.

5. Choose a longer loan repayment tenure

Choosing a longer loan repayment tenure reduces your EMI burden, thereby increasing your chances of getting approved. But keep in mind that a longer tenure may result in you paying more interest overall.

6. Provide information about other sources of income

If you have additional income from previous investments, rent or freelance work, mention it in your application. The higher the income, the better your loan repayment capacity and eligibility.

7. Avoid applying for loans repeatedly

Every loan application is subjected to rigorous scrutiny, which can lower your credit score. Apply for a personal loan only when necessary and always ensure that you meet the loan conditions.

Eligibility Criteria

Income and repayment capacity: First of all, lenders check the income of the person. This tells them how capable the applicant is to repay the loan. Salaried applicants should have an income of at least Rs 15,000 to Rs 25,000 per month, while for self-employed people this figure can be higher.

Credit score: Lenders give more importance to a credit score of 750 or more. However, they also consider a score of 700 or above as good.

Age: At the time of applying for a personal loan, the age of a salaried person should be between 18 to 60 years, while the age of a person running his own business should be between 21 to 65 years.

Business and job stability: Most lenders consider at least one year of job experience. While for businessmen this criteria is at least three years.

Employer’s profile: The applicant’s employer or business background can also impact loan eligibility. Lenders may give preference to people working in large organisations.

Documents required for personal loan

ID proof like PAN or Aadhaar card
Address proof like Aadhar card, electricity or water bill
Income statement which shows your payment capacity
Some lenders may also ask for bank statements for the last 3 to 6 months