How do you become eligible for a personal loan?

• cholamandalam
• August 5, 2023September 5, 2023
• 28

Personal loans are popular financial tools that help you solve your short-term financial needs. Some common reasons to avail a personal loan are medical emergencies, home renovation, marriage, education, travel expenses and many other unforeseen fund needs. At the same time, not everyone is eligible for a personal loan. In this article, let’s discuss the personal loan eligibility criteria.

High Credit Score

The first and foremost criterion every lender checks before sanctioning a loan is the credit score of the customer. Since credit score represents the trustworthiness of the customer, it is the most important factor that decides your loan approval. If you have a low credit score, your loan application gets rejected at the first step itself. So, you need to increase your credit score to make yourself eligible for a personal loan.

A credit score is a three-digit number that estimates the creditworthiness and loan repayment capability of a customer based on the previous loan repayment history of the customer. A high credit score indicates that a customer is creditworthy and is capable of repaying the loan acquired within the specific loan tenure accepted in the loan agreement. A low credit score means that the customer is a loan defaulter or the customer has not made loan repayments on time in the previous loans availed.

Lenders have specific age limit for borrowers to avail personal loans. The minimum age requirement to avail a loan is usually 21 years and maximum may go up to 65 years. Each lender has a different criterion with regards to age limits. You can check with your lender for your age limit related queries.

Stable Income

It is essential for an individual or a self-employed person to have stable income and proof for that stable income to be eligible for a loan. Lenders make this criterion mandatory because they always make sure that their customers have repayment capacity. Some lenders also check whether customers have a stable job or business that generates a regular monthly income.

Documentation Requirements

Each lender has specific document requirements. You should have all the necessary documents your lender is asking for. Some of the common documents required to avail a loan include identity proof, address proof, bank statement, tax returns and employment proof, depending on the lender’s requirements.

If you have a good credit score, it is very easy to get a personal loan instantly. You can use an online loan eligibility calculator to instantly check your loan eligibility. Most of the reputed lenders have this eligibility calculator on their website to facilitate their customers.

Cholamandalam Investment and Finance Company Limited is a renowned name in the Financial services industry and has solutions for all your financial needs. Contact us for more information.