Personal Loans Affect Your Credit Score
Personal Loan is a kind of credit facility that is provided by banks, local credit unions and online lenders. The borrower is supposed to repay the money along with a fixed percentage of interest that is charged by the lender. Personal loan availability has offered a very flexible procedure for borrowing money. A lot of people face a financial crisis at different stages of life. Personal loans allow them to overcome their problem in a much easier and flexible manner. Although there are a lot of lenders & banks available in the money market, a borrower must always choose a trustworthy source of credit to access loans. A personal loan eligibility calculator can be used by a person to check whether he/ she is eligible for the loan or not. It is easy to use and safe to access for calculating the eligibility of a person to avail a loan.
Eligibility Criteria of Personal Loans
With the range of options and sources available, it is easy for a person to avail a personal loan in today’s money market. However, it is not safe to avail loans from unreliable sources that are available locally. One should check their eligibility through a personal loan eligibility calculator and then opt for a suitable amount of loan from a reputed bank. Try the loan eligibility calculator now and check if you are eligible to avail a personal loan.
Although the eligibility criteria might vary from bank to bank, the general criteria are:
- A loan seeker must be a salaried individual, a self-employed person or a professional with a fixed amount of monthly income
- The person must be aged between 21 years and 60 years. However, the minimum age limit of the individual varies from bank to bank
- If a person is already a borrower of some other loan (like home loan, car/bike loan etc.) then he/she might be a good credit score holder
- The eligibility of a salaried individual also depends upon the name and reputation of the company he/she is working in
- The amount of loan that will be granted by the bank depends entirely on the salary or income of the individual
Apart from the basic eligibility criteria, there are few other factors that affect a lender’s decision. They are:
- The personal loans provided by banks are “unsecured”. That is, banks do not take any mortgage from the borrower. However, if the borrower has anything that he/she can keep as a mortgage to the lender, they might be able to avail the loan at a cheaper interest rate than the general interest rate offered by the bank.
- If the past records of your general savings account in the bank are well-maintained and the transaction history of your account is good enough, you may avail a high amount of personal loan. This difference can be calculated using a personal loan eligibility calculator.
The best part is that there are minimal paperwork and formalities involved in the sanctioning of a personal loan from a formal source, provided that the criteria are met properly. Hence, it is always recommended to avail loans from banks and other established financial institutions/ loan lenders.
What is Bad Credit History?
A borrower who had failed to pay a loan in the past or who could not pay his/ her installments on time is considered to have “bad credit”. A bad credit is reflected by the credit score and past transaction histories of the borrower. The credit score of a borrower is circulated in the banks as soon as he/ she applies for a loan. The bank does not provide a loan to a person whose credit score is below par and who had failed to pay his/her bills in the past. To avoid rejection due to bad credit history, one may use the personal loan eligibility calculator before availing a loan.
How to Overcome Bad Credit?
If you have a bad credit history, you may follow these tips to improve your score:
- Pay all your installments on time. You can fix a particular date of your EMI deduction from the account
- If you are a credit card holder, maintain good and sufficient balance in that account. Credit card facilities are a good option for regular borrowers
- Do regular bank transactions and try to pay your electric bills, rent and other shopping bills through the online facility of your bank
Remember, timely payments of EMIs is of utmost importance but there are several ways as well which you can follow to build a healthy credit rating.
Personal loans are a very convenient credit facility provided by banks. If a person wants to borrow money during any emergency or needs to finance something, availing a personal loan would be ideal in such cases.