As more and more people are applying for loans, your credit worthiness determines your chances of getting one. Ironically, the less money you have in your pocket or the more you are in need of a loan, the less likely it is for you to get a low interest loan.
Factors affecting personal loan eligibility:
- Income: Higher the income increases the chances of you being eligible for higher loan amount.
- Housing situation: Residing in own house is better as considering the repaying capacity is low of rental.
- If you have availed Personal Loans California before, then the chances are lower than no credit to repay.
- Company: The Company you’re working in also determine if you’ll get the loan. Working for a reputed company makes you considered as someone with stable job.
- Credit history: Interest rate, tenure and the loan amount you can borrow depends majorly on your kind of credit.
Things a bank checks before offering a personal loan-
- Proof of being a citizen of the country.
- Age proof
- Creditworthiness includes bank details and the monthly income of the borrower.
Perks of Personal Loans:
- Consolidation Ability: One of their most excellent benefits is employing unsecured loans for debt consolidation. Clearing off several loans with rising interest rates with the money from a private loan with a reasonable interest rate is a wise decision.
- No Collateral Restrictions: Personal loans come in two varieties: secured loans and unsecured loans. Most private loans are unsecured, meaning there is no security to support the transaction. For the bank or financial institution to repossess your personal property, you must place it up as collateral if you cannot make your loan repayments. But for personal loans, no collateral is required loan will be sanctioned based on the credit analysis.
- Reimbursement Capacity: Banks and NBFCs ordinarily support individual advances to candidates whose EMI/NMI proportion is under 50% to 55%. However, this fluctuates by the loan specialist. This implies that their absolute charge card and existing credit EMI commitments, including the proposed advance, can’t surpass half of their all-out pay.
- Numerous on-going loans: If you have several active loans then be aware that you are in the category of high debt-income ratio and it could lead to a default on payment. That will ultimately lead to a drop in credit scores.
If properly utilized, you can make Bad Credit Loan as a start of a financial turnaround thereby increasing your credit score.