Tips To Follow to Increase the Odds of Personal Loan Approval

By: Admin
On: April 26, 2025

Personal loans are versatile financial solutions offered by several banks and non-banking financial companies or NBFCs, across India. These loans are usually sought out by people requiring a lump sum amount of money for diverse purposes, starting from home renovations and medical expenses to debt consolidation. Personal loans are a form of unsecured loans. This means that loans do not require collateral, which makes them a popular choice for those without assets to pledge. Lenders assess the creditworthiness of borrowers to determine eligibility and interest rates for the loan.

As you plan to apply for a personal loan online, you must also think about the odds of getting the loan application approved. There are a few factors that can help increase your chances of getting the personal loan application approved.

Maintain A High Credit Score

A strong credit score is important for obtaining any loan, including personal loans. Lenders view the credit score as an indicator of the creditworthiness of borrowers, and a high CIBIL score suggests that you are less likely to default. Moreover, as personal loans are unsecured loans, your credit score and credit history become the prime tools through which lenders assess your credit repayment abilities. Your credit history shall comprise the repayment information of your loan and credit card dues. If you have timely paid off your dues, then your credit score is likely to be high, increasing the chances of having the personal loan application approved. It may also make it easier for you to negotiate your preferred loan interest rate. A credit score exceeding 750 points is generally considered a high credit score.

Reach Out to The Credit Bureau

You must check your credit report before applying for a personal loan, and keep an eye out for any discrepancies. For instance, you have paid off all the EMIs of your previous loans on time, but the bureau report shows that the EMI for a certain month was not paid. Such errors have to be rectified as soon as possible. Making sure that your credit report is accurate can help improve the CIBIL score, and thereby improve the loan approval chances as well.

Improve CIBIL Score

Even if you do not have a high CIBIL score at the moment, you can always take steps to improve it, and thereby increase the odds of personal loan approval. For instance, you might cut down on unnecessary expenses or temporarily avoid taking on any new debts. You may also repay your outstanding credit card dues in full, as well as limit credit utilization in order to improve CIBIL scores.

Check The Eligibility Criteria of Your Chosen Lender

Each and every lender has diverse eligibility criteria for their personal loans. Hence, it is important to check your personal loan eligibility criteria prior to applying for the loan. Lenders generally have unique requirements regarding credit score, income level, employment status, age, residency, and more. By reviewing these criteria upfront, you can quickly determine whether you qualify for the loan prior to applying for a personal loan online.

Choose A Longer Tenure

Lenders generally provide a repayment tenure of up to five years for personal loans. A longer tenure would result in a lower EMI amount. Choosing a longer tenure can help lower your financial burden to an extent, as you would get to repay the loan in budget-friendly instalments over time. It can also increase your chances of loan approval.

Avoid Multiple Loan Applications

As you apply for a personal loan online, the lender shall assess your credit report. In case you have applied for personal loans with several lenders, all of them would want to access your credit report. Hard enquiries on your credit reports may make you look like a high-risk, credit-hungry customer. If multiple lenders reject your loan application, it would also have a negative impact on your credit score. Hence, rather than applying for multiple loans, you need to carefully research popular lenders, check their eligibility criteria for personal loans, compare their interest rates, and zero in on any one of them.

Increase Your Income

If possible, you should try your best to increase your income before applying for a personal loan. Lenders would want to be assured that you can pay them back. A higher income automatically translates to a higher chance of loan approval. If you have been at your job for a while and have a good track record, it might be a good time to ask for a raise. Alternatively, you can start a side hustle or rent out any spare property you may have for extra income.

All the steps discussed above can significantly increase the odds of getting a personal loan application approved. In the competitive financial landscape of today, securing a personal loan can be challenging for many. But following a few tips can certainly enhance your chances of approval.