Before issuing a personal loan of Rs. 3 Lakhs, the lenders consider a variety of parameters before arriving at a decision. Some of the parameters and factors are given below :
Credit Score: A higher credit score indicates a lower risk for the lender. Lenders usually prefer borrowers with a credit score of 750+ in order to be eligible for a personal loan
Income and Employment Stability: Lenders assess the borrower’s income to ensure they have the financial capacity to repay the loan. A Stable employment history and a regular source of income play positive role in the outcome of your loan application. For salaried people, lenders expect a minimum of 1 year in the present organization for self-employed people, lenders expect the borrower to have run the current business for atleast two years.
Debt-to-Income Ratio (DTI): Lenders evaluate the borrower’s DTI, which is the ratio of their monthly debt payments to their gross monthly income. Banks and NBFCs expect a DTI of less than 30% in order to successfully process the loan
Loan Amount and Repayment Capacity: The loan amount is determined largely based on the borrowers repaying capacity and his current debt obligations.
Credit History: Aside from his present credit score, the lenders might also look into borrower’s credit history for trust. Credit history documents all the loans that the borrower has taken along with his repayment record.
Age of the Borrower: Lenders may consider the borrower’s age, with younger individuals sometimes facing more scrutiny. Older individuals with a stable financial history may be perceived as lower risk.
Understanding these factors and working on strengthening your credit profile boosts your chances of getting approved for a personal loan at favourable terms.
