Personal Loans - Frequently Asked Questions


How to Improve your Odds of Getting a Personal Loan?

Getting a personal loan is not always easy, at least not as easy as the ads and websites want to tell you. It is still tough because loans are limited while the people coming for them are too many. What you need to do in such a situation is to stand out. 
Here are the steps to do just that!
1.       Clean up your credit: One of the top criteria for any loan is to have a good credit score. Do, is your credit score up to that mark? Each bank and most NBFC have specific credit score level criteria. In case your credit score is not there yet, don’t worry. There are many ways to increase the score. You should also check your credit report for any errors. If you find any, report those immediately to CIBIL.
2.       Balance up your debts and income: All lenders, regardless of banks and NBFCs, will ask for your income level. You may not be able to increase your income immediately for getting a loan, but you can still bring down your debts and liabilities, and that goes a long way! Consider paying off your debts first before taking a new loan. Think about selling off stocks and of taking a part-time job. These will increase your annual income, your debt-to-income ratio, and by extension your chances of getting a personal loan.
3.       Consider having Guarantors/Co-signers: Some personal loans actually require you to have the support of Guarantors and Co-signers, especially if you have never taken loans before or if you are a student. In any case, the person you should choose for this needs to be one with a good credit score like 750.
4.       Borrow less: A thumb rule when it comes to money is never to borrow more than what you can pay back. In other words, “don’t bite more than you can chew”.
5.       Choose the ideal lender: Not all lenders have the same requirements. Some may have easier requirements while others may have more stringent ones. Pick the one whose criteria is met by you. By the way, don’t apply with multiple lenders at the same time. They will all inquire
into your credit score, which brings it down.

How to get a Personal Loan when you have a Bad Credit?

Let’s get one thing straight. Bad credit score and loans do not go hand in hand. That’s like the proverbial fork in the road, or even a dead end if you will.
Lenders take a risk when they give away loans. What if their borrowers default? Then they may never get back their money, unless of course there’s a security. In case of personal loans, since they are unsecured loans, the risk is greater. That’s why more emphasis is given on your credit score. It needs to be of a sufficient level before anyone will give you loans, especially personal loans.
However, it is not impossible to get personal loans in case your credit score is low. There are still some things you can do to prove that.
1.       Prove that your income is enough to support EMI payment: This is one of the most important steps you can take. A lender may just accept to give you a loan if you have a steady job with a salary to guarantee you’ll pay back the loan. However, you may still have to pay a higher interest.
 
2.       Consider a lower personal loan amount: Can you do with a small loan amount? If you can, consider that seriously because without most lenders may not consider your case if you have a low credit score. However, they can if you need only a small loan that is of less risk to them.
 
3.       Take the help of a guarantor or a co-applicant: Doing this makes the likelihood of getting the loan higher. That’s because in case you can’t give back the loan, your guarantor will have to.
 
4.       Tidy up your credit report: Your credit score is low because it's in a mess. Consider taking time off to clean it. If none of the above steps work for you, this one will even though it’ll take much more time.

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