A personal loan has multiple uses. You never know when you might need one. Therefore, it’s always a good idea to make sure that you’re in a position to be approved for one. However, once you’ve done this, how can you make your loan application sail through the process and have your loan approved instantly? Here are a few tips that will help.
Track your credit score.
One of the first things lenders do is check an applicant’s credit score. So, one of the first things you need to do before considering a personal loan is to ensure your credit report is favorable. You cannot do this instantly, but it will take years to build. You must keep track of your debts and pay them off on time. Do not keep too many credit cards; if you have only one or two, do not limit them very much. Credit cards are unsecured, just like personal loans, so lenders will view this as a risk if you apply for the latter. Pay your EMIs on time, and keep your debt (your EMI payments) to under 40 percent of your income. Show all your income, and you should be able to get a high credit score. You can look at your credit score on the CIBIL website. You can even correct discrepancies by submitting evidence via the website and possibly increasing your score.
Check your loan eligibility before applying.
Many lenders have many tools on their websites, like personal loan EMI calculators, for example. One is a personal loan eligibility calculator, which asks you to fill in some basic financial information and lets you know whether you will be eligible for a personal loan. This is much better than a proper loan application because it is informal with no repercussions on your credit score. It also gives you a realistic target to aim for if you need a personal loan.
Use technology to your advantage.
Rather than walking into the lender’s office, apply for the loan online. Physical interaction is not recommended during this pandemic. So, using online makes far more sense from a practical standpoint. In addition, if you consider a bank that you already bank with as your lender, go through the mobile phone app; it will show you what amount you are pre-approved for. This is an amount that, if applied for, will be disbursed to you within an hour or two. Even if you need a higher amount, you have a better chance of getting approved by a lender with whom you have had a long-standing relationship, especially one of credit. Even if you choose a new lender, you can always apply on their website, where the required documents are usually published. All you need to do is scan the necessary documents, submit them, and await approval.
Understand the lender’s requirements before making the application.
Some lenders have complicated criteria for a personal loan because an unsecured loan has no collateral and is, therefore, a greater risk for the lender. If you don’t understand the lender’s criteria, the odds of missing something required are higher than usual, and your loan application might get rejected. That rejection will show up on your credit score and lower it, so that’s not good. If you don’t fully understand the lender’s criteria, apply to a lender with simpler criteria, even if the personal loan interest rates might be higher or the repayment tenure shorter. Suppose you need a personal loan in a hurry. In that case, you need to avoid applying to multiple lenders simultaneously because it will reflect poorly on your credit score, so it is best to stick with a lender that has easy-to-understand requirements.
