Personal loans come in handy when you’re in a tight spot financially or in an emergency. These loans may be obtained with very little paperwork and without any need for collateral. Getting a personal loan authorized is a piece of cake now as many banks and Non-Banking Financial Company (NBFCs) are providing easy and quick personal loans. Many financial organizations do not reveal all of the terms and conditions of a loan application upfront, resulting in a delay in the processing of a loan.
Whether it’s creating a good credit score or maintaining a regular income, it is advised to make it a habit to keep a check on your financial commitments, your earnings, savings, general expenses, EMIs and everything should be in line with your future plans. Once an individual creates a strong base, the journey forward is a cakewalk. As many individuals opt for a personal loan when they’re in a pinch, it’s important to avoid any unnecessary snags by following these simple tips:
Your credit rating may be improved
One’s credit history is numerically represented by their credit score. Lenders use it to assess the risk of default and to get a sense of the applicant’s financial discipline. A perfect score is one which is above 750. Take steps to improve your credit score by paying off your EMIs and credit card payments on time and restricting the amount of credit you avail. Personal loans are more likely to be approved if a borrower has a good credit score.
Maintain a consistent work history
It is important for lenders to know if the applicant has a regular income history to decide whether or not they will be able to maintain a lifestyle with financially security in the longer run. They prefer a candidate who is having a stable career and avoids a lot of shifts in their employment status. For those who do not have a good business background or a lot of property to pledge against a loan shall continue with their job in order to avail loans.
Bring in a co-applicant or guarantor
Even if you don’t match all of the lender’s eligibility requirements, such as having a good credit score or a regular income, you can still apply for a joint loan with someone. In such a scenario, the co-applicant is equally entitled for repaying the loan; and reduces the overall credit risk. Having a co-applicant enhances the possibilities of obtaining a larger loan amount.
Avoid using several enquiries
Desperate applicants who fill out applications with multiple lenders give a terrible impression about their financial status. In addition, a person’s credit score decreases with every rejection of their loan application, making it more difficult to secure a loan at that time or in the future. The best way to approach such a situation is by contacting your own bank and asking them to provide a loan on your existing account.
Preserve some time for reflection
If your loan application is rejected, then you must wait for at least six months before applying for another one. It is considered to be an act of desperation if you ask for loans too often; you must delay it a little and then apply again, this will create an impression that your finances are solid enough to have gone without a loan for so long and you utilize it only when you are in need.
Once you start following these suggestions rigorously, you’ll always be prepared in advance for getting a personal loan approved in a timely manner. In most circumstances, a personal loan is needed at the time of an urgent need or for a short-term financial assistance, but we advise that you should never rush to apply for a personal loan. Instead, do a little homework by yourself and only then submit the application to the lender where you meet most of the eligibility criteria and other conditions. Even more importantly, make sure you are aware of additional fees & charges that may be imposed by the lender before or after signing the paperwork.