Personal Loans come in handy when it comes to taking care of diverse requirements right from medical emergencies, weddings and higher education to buying appliances and vacations. Personal loans are usually disbursed within a period of 72 hours but there are several precautions that one should take while applying for the loan. There are 5 key points to keep in mind when applying for personal loans:
- Credit Score- Your credit score can be low even if you have not defaulted on your home loan EMIs over the last few years. The credit score takes into account transactions made over the last 5 years. You should always check your credit score before applying for a personal loan in order to correct any inconsistencies in the credit report. Your credit score may also be low in case you have applied for multiple loans in a shorter span of time. Most banks take a CIBIL score of 750 and above as a good indicator of creditworthiness.
- Your Income- You should always keep in mind that every financial institution expects that you should earn a minimum income every month, which enables you to repay EMIs in a timely manner. The minimum amount required varies from one financial institution to another. In order to get your home loan application approved, you should check whether your income meets the minimum eligibility criteria or not prior to applying.
- Employment- Most financial institutions pay close attention to your employment history over the years and also check your track record. The borrower should hold a stable job for a minimum period of time. In case you are applying for a personal loan, you will have to submit income details as well.
- Proper Information- Financial institutions examine all major details provided in the application. Your application may be rejected if you do not provide accurate information. Be careful while filling up the loan application in order to ensure that you provide accurate details.
- Credit History- Banks usually prefer approving personal loans for applicants who have already taken secured loans like home loans before. If you have more unsecured loans in your portfolio then the chances of getting your home loan application approved are slimmer. It is about maintaining a balance between unsecured and secured loans. Holding multiple credit cards is also not recommended.