How To Improve Your Chances Of Getting A Loan
Your credit score is an indicator of your creditworthiness Generally, your EMI is equal to close to half of your take home salary If possible, repay your existing debt before applying for a new loan
There is nothing as disappointing as getting a loan denied when you are in urgent need of cash. There could be many reasons for which your loan application might have been rejected. Getting your homework right can increase your chances of loan approval.
Improve your credit score
If you have a good credit score, the chances of your loan application getting approved are higher. Your credit score is an indicator of your creditworthiness and is based on your credit repayment history. You can improve your credit score by paying outstanding dues on time. Also, any mistake in your credit report (which contains your credit score) can result in rejection of your loan application.
"It is important for you to check your credit report for any errors and pay off outstanding dues before applying for a loan," says Naveen Kukreja, CEO and co-founder of Paisabazaar.com.
Get co-borrowers
A lender gives you loan after assessing your repayment capabilities which is calculated on the basis of your income. Generally, your EMI is equal to nearly half of your take home salary. But if your income is falling short of the required eligibility limit, try and arrange for a co-borrower. This will improve your eligibility criteria.
"The co-borrower's repayment capability will be added to yours, thereby increasing your eligibility and credit limit," adds Mr Kukreja. Banks allow as much as six co-borrowers including your spouse, parent, children and siblings.
Include your perks
If you get a significant portion of your salary in the form of perks as part of your CTC (cost to company), add them to your income. "This will show an increased repayment capacity and will improve your eligibility," says Adhil Shetty, founder and CEO of Bankbazaar.com. "Perks may include performance-linked bonus or additional pay for overtime etc.," he adds.
Clear your outstanding dues
If you already have some outstanding loan, it will lower your eligibility. So, if possible, repay your existing debt before applying for a new loan.