Top News

It's not wise to take a personal loan without prior knowledge. It's best to understand the necessary criteria before applying. Rejecting a loan not only delays your plans but also impacts your credit score. Banks and fintech companies check certain key factors before approving a loan. Knowing these factors can help you improve your financial profile and secure a loan with better terms.

Salary
Lenders (banks or fintech companies) want to ensure you have a steady income so you can repay the loan. A higher income level increases your chances of loan approval. Working for the same company for 1-2 years also works in your favor. Self-employed individuals must provide proof of income, such as financial reports or tax returns.

Credit Score
Your credit score plays a crucial role in securing a loan. A score of 750 or higher is considered good. This indicates that you have repaid previous loans on time. If you have defaults, late payments, or too many loan applications, approval may be difficult. Check your score regularly and correct any errors in your report.

Current Debt and Liabilities
Before granting a loan, banks consider your Debt-to-Income Ratio (DTI), which is how much of your monthly income is already going towards EMIs. If more than 40% of your income is going towards EMIs, your chances of getting a new loan decrease. Paying off old debts early or consolidating loans can improve your eligibility.

Age and Repayment Capacity
Younger applicants, who have many years of income ahead of them, are considered lower risk. However, applying too young can be detrimental if you lack a financial track record. Most banks consider the age range between 21 and 60 years to be ideal. The loan term is usually set until your retirement age.

Employer and Profile
Where you work is also important. If you work for a well-known or stable company, your loan application may be approved faster. Banks consider those with professional degrees or those in regulated professions (such as doctors, engineers, and CAs) to be more trustworthy.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.