A personal loan is a great way to get the cash you need. However, it’s important to understand that not all personal loans are created equal and the lender will have some criteria on which they base their decision when giving out money. These criteria usually include your CIBIL Score as well as other financial factors such as income and debt-to-income ratio. If you want to know what they are, keep reading!
CIBIL Score
CIBIL Score is a three-digit number given to you by your credit history reporting agency. Based on this Score, banks and other financial institutions take decisions on whether or not to grant loans. This is also known as Credit History.
One can check their CIBIL Score at any time of the day or night because it is available 24x7x365 days a year, and it doesn’t cost anything to check your Score either! You will receive a free email with your updated report after checking it out online.
You can apply quickly for the best online personal loans through top lenders’ websites.
Credit Card Statements
Credit card statements are a good way to check your credit history. You can use the details of these statements to check the quality of your credit history, including information about how long you have had an account open and what types of transactions you have made with it.
If you have only opened one or two accounts, this may not be enough information for lenders to give you a loan at all. In that case, contacting old employers could help them see how well-established and reliable you are as an employee or business owner.
“Be sure to check terms and conditions to know how you can use any funds you apply for,” as Lantern by SoFi states.
Personal Loan Debt To Income Ratio
To get a personal loan, you must have a good credit score. And to get the best interest rate on your personal loan, you should also have a low debt-to-income ratio. The debt-to-income ratio or DTI, is one of the most important factors in determining what kind of loan rates any lender will offer you.
The higher your DTI is, the lower your chances are of getting approved for any type of loan and at high-interest rates as well.
The formula used to calculate your DTI is: Total amount owed (car payments, student loans etc.) divided by gross monthly income – this number gives lenders an idea how much money they’re making after deducting all their expenses such as mortgages or rent payments but also includes all other monthly expenses such as food and other bills like utilities etc.
Personal Loan Eligibility Calculator
The first step in getting a personal loan is to calculate your eligibility. It’s important to understand the differences between personal loans, fixed rate and variable rate loans, how much you can borrow and how much interest will be charged on your loan before you apply.
The calculator above will tell you whether or not you’re eligible for a personal loan based on your answers to questions about income, expenses and other financial commitments.
As you have seen, many factors can influence credit decisions. All of them, however, boils down to one thing: your ability to repay the loan. The best way to get an idea of how a lender will view your ability to repay is by checking out their website and reading through their terms and conditions.
