Instant fund disbursal, minimal documentation, and zero collateral requirement make a personal loan the best borrowing option to meet your immediate fund requirements. However, this ease to avail funds often makes many borrowers overlook important aspects of personal loan eligibility. Discussed here are some important points you must consider before you hit on the personal loan apply online option.

  • Maintain a high credit score

Your credit profile is one of the crucial parameters considered by lenders when assessing your application for a personal loan. As a good credit score can enhance your loan approval chances and allow you to avail a personal loan at a lower interest rate, consider following healthy credit habits to maintain a high score.

These habits include repaying your outstanding dues on time and in full, maintaining a credit utilisation ratio not above 30%, constantly monitoring your loan accounts, and periodically reviewing your credit report to find any error or mistake responsible for pulling your score down.

  • Select a loan repayment tenure as per your repayment potential

While assessing your application for a personal loan, lenders evaluate your repayment potential by calculating your Fixed Obligation to Income Ratio (FOIR). FOIR is the proportion of your income that you use to repay your debts. Lenders usually prefer lending those with a FOIR of up to 50% so ensure to choose a repayment tenure that allows you to keep your ratio within this range.

You can also consider going for a higher repayment tenure. When doing so, note that a higher repayment tenure also means a higher overall interest cost.

  • Do not place loan application requests with multiple lenders

Whenever you place an application for a credit card or loan, lenders pull out your credit report to assess your repayment behaviour and credibility. Such lender-initiated requests for credit reports are known as hard enquiries. Hence, it is important for you to avoid placing multiple personal loan applications, as this would result in multiple hard enquiries within a short time period, which would reduce your score considerably. A drastic fall in credit score may make the lender turn down your personal loan application too.

Instead of applying for a personal loan directly with multiple lenders, consider using online financial tools such as a personal loan eligibility calculator, a personal loan EMI calculator, etc., to easily compare and select the most suitable personal loan deal based on your credit score and other crucial eligibility criteria.

  • Refrain from constant job switches

Your employment past record and financial stability are important parameters considered by lenders when assessing your request for a personal loan. As constant job switches are generally looked upon as a mark of an unstable career, lenders may hesitate in approving your personal loan application. Hence, do not frequently switch your job, particularly if you are looking to avail a personal loan.


The above mentioned are some common factors taken into consideration by lenders to decide your personal loan eligibility. So, ensure to familiarise yourself with the same and keep handy the required documents to avail the loan instantly.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.