The need for money can come from anywhere, and in such situations, the first choice towards which individuals look for is a personal loan. But when we talk about a personal loan, one of the most common questions that people ask before taking this is — Is there a minimum credit score that is necessary to take a personal loan? Credit score, because it provides an idea about the creditworthiness of an individual. If the credit score of an individual is low, it means he or she doesn’t have a habit of making repayments on time and vice versa. Since a personal loan is an unsecured loan, lenders cannot take the risk of providing the loan amount to individuals without checking the credit score.
Coming back to the credit score of individuals, the most general score that almost every lender considers as a benchmark is 700 or above. A credit score of 700 above clearly indicates that an individual has responsible repayment behavior, and he or she generally pays the debt on time. But we want to tell you an important thing that this eligible score changes from one lender to another, so it may be possible that a lender gives a personal loan to only those lenders who have a score of 750 or more. So, an individual must check before choosing a personal loan what is the eligibility criteria of a particular lender.
Talking about Eligibility Criteria, in this article, we will be discussing some of those factors that affect personal loan eligibility criteria. Let’s start!
Factors affecting Personal Loan Eligibility
What are some of those factors that can affect personal loan eligibility? — Well, people always look to find answers to this question as without knowing these factors, they may find difficulty in getting a personal loan. We are showing some of them below. Have a look!
One of the important factors that lenders check is the repayment track of an individual. With this, lenders can have an idea about the repayment behavior of yours. There is one important thing you need to remember that this behavior includes all kinds of credit card bill payments, EMI Payments, and also utility bill payments. If someone has been paying his or her dues on time, the repayment track of that person will be good and vice versa. One of the best methods to check repayment behavior is to check the credit score.
Monthly Income and Existing Obligations
Individuals pay off their personal loan by setting a certain part off from their monthly income. That’s why it is one of those important factors that individuals should keep in mind when going for a personal loan. Simply put, if an individual has a higher monthly income with fewer existing obligations such as a Loan and Credit Card EMI, lenders may provide him a higher loan amount as he can easily repay the loan amount. On the other hand, the loan amount will be lower for individuals who have a low income. If you have some existing EMI, the lender will make sure that you will be able to pay the personal loan EMI with the existing one.
Employment Type and History
Lenders also check the employment type of an individual before sanctioning the loan amount. It may be possible that a lender does not give a personal loan to self-employed people as they don’t have a fixed monthly income. Lenders don’t want to face credit risk with such individuals. Similarly, a few lenders don’t provide a personal loan to those individuals who work in a Non-listed company. Similar to the employment type, Personal Loan lenders also check the employment history of individuals to see their credibility.