If you are seeking a personal loan, you must meet certain eligibility requirements imposed by lenders. Personal loans do not require you to pledge any collateral with the lender; they are unsecured, which is why lenders employ a variety of criteria to assess if you are creditworthy. It should be noted that assessing a consumer’s credit outlook is critical for lenders to make a choice. Lenders use risk-based pricing to decide the interest rate on your loan after reviewing your profile against a set of characteristic
duals who have demonstrated a high risk in managing their credit in the past may find it difficult to obtain loans and are typically offered a higher rate of interest than those who have a clean credit history.
Personal Loan Eligibility: Lenders use the following criteria to evaluate whether you are eligible for a personal loan:
The first factor that lenders consider is your employment status, whether you are self-employed or employed. Lenders like to make personal loans to people who have a steady source of income.
Your credit rating
Your credit score is the most essential factor that lenders use when analyzing your loan application. Your credit score is essentially a number that indicates how you’ve used credit in the past as well as your current credit health. The credit score is calculated using information from your credit report and is influenced by a variety of factors such as your total outstanding debt, the number of debt(credit) accounts, the duration of your credit history, and your prior repayments on current loans/credit cards. Personal loans from Fintech lenders can be obtained with a credit score of 600.
Your repayment record
Your repayment history is the next critical eligibility factor that lenders attentively examine. Your payback history demonstrates how consistent you have been with your previous debt payments. It shows instances of late payments and defaults to help lenders make an informed lending decision. With understanding the type of credit management behavior you’ve demonstrated in the past. Any incident of default might seriously harm your loan or credit card acceptance chances. Also, read about the business loan interest rate.
Your employment experience is the amount of time you’ve worked. Many private banks require candidates to have 1-2 years of job experience, yet Fintech lenders accept applicants with only 6 months of experience. Working for a single employer for an extended length of time boosts your creditworthiness, and if your employer is a reputable global corporation, that’s even better.
Most lenders ask that you be between the ages of 23 and 55. If you are at least 23 years old and have no credit history, you may be able to apply for a personal loan from a Fintech lender.
Your monthly income is another critical aspect that determines not only your loan eligibility. But, also the amount lenders will offer you. Lenders have different income eligibility criteria – Fintechs allow you to qualify with an income of Rs 18,000 per month. Whilst certain private banks require an income of Rs 25,000 or more.
Your employer’s classification
After their risk profile is analyzed, companies are classified and assigned a letter grade ranging from A to D. Individuals working for organizations classed as Category “C” or “D” frequently find it difficult to obtain loans from major credit institutions. However, with the introduction of Fintech lenders into the market. This dynamic has changed, and employees working for uncategorized or unlisted enterprises can now obtain quick credit. However, if you work for an unlisted or uncategorized employer, you should approach a Fintech lending institution to prevent rejection. Also, read about what is working capital.
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