How can you improve your chances of getting a personal loan? 5 key points to know

Securing a personal loan for an array of reasons is easier than it appears. Amid a flurry of lending options available, one can simply apply on any of the online lending platforms where eKYC is carried out before the loan disbursal. And the money is transferred within a short period. This time span could be as short as 15 minutes.

Meanwhile, it is vital to note that the lenders – big or small – tend to check the credit score before disbursing a loan.

When the credit score is low, the chances are that the lender would either turn down the loan application or charge a high rate of interest.

So, if you also want to improve your chances of getting a personal loan, then you can take the following steps.

Key steps to improve the chances of raising a loan

1. Pay EMIs on time: It is recommended to pay your bills and EMIs on time. And make sure to keep credit card balances low, ideally below 30 per cent of your limit.

2. Stable income: You can provide the proof of consistent income via salary slips, bank statements, or tax returns.

3. Lower debt-to-income (DTI) ratio: A lower DTI ratio implies that you have more financial muscle to repay new loans.

4. Borrow what you need: When you apply for a high loan amount, it unnecessarily raises red flags.

5. Co-applicant: When you add a co-signer with a good credit score and income, you can improve your chances of approval.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

For all personal finance updates, visit here