The pandemic has hit us very hard in the pockets, and it is clearly evident from many surveys and studies that state that roughly 39% of people are facing a salary cut in their current jobs. Though everything is opened up, and things look like we are getting back to normal, there is a section of people who are still facing a financial crunch. Thus, at this moment, a personal loan can be more than just a boon.
One of the basic reasons behind getting a personal loan is to make up for the lack of funds in an emergency or to fulfil immediate non-emergency expenses. Lenders, on the other hand, don’t just hand out personal loans; they consider various aspects. They will evaluate ICICI Bank personal loan application or any other lender you have applied to before sanctioning a loan. Chief among those factors are your credit score, monthly income, job profile, stability of the job position you are in, location, and fixed obligation to income ratio. While you can do very little with your salary, job profile, and location within a short span of time, there are other things you can do that can ensure your ICICI bank personal loan application or, rather, other lenders don’t get rejected. Here are the fool-proof ways to improve your loan eligibility:
Your total monthly outgo to income ratio should be below 40%
Your loan application may be denied by the lender if you don’t have a sufficient bank balance. You can check your bank balance via the ICICI bank balance check number or the online portal of the lender before applying for a personal loan. The majority of lenders look at your ICICI bank personal loan application after determining your annual income and existing debt obligations and then sanction you a loan amount accordingly. This enables them to assess your ability to repay the requested loan amount without default. Your loan application may be denied if your yearly income is minimal and the lenders believe you won’t be able to repay the amount you are requesting. If you have any current debts, you should pay them before applying for a loan to lessen the likelihood of this happening.
Should have the credit utilization ratio less than 30%
The credit utilization ratio is the percentage of the total credit card limit used by a credit card holder. Financial institutions consider a credit utilization ratio of over 30% as a sign of credit hungriness. When it goes up, credit bureaus reduce credit score, which reduces your loan eligibility. Thus, ensure that your credit usage ratio is under 30%.
Do not apply for multiple loans.
You might think applying for multiple loans will increase your chances of getting at least one loan application approved, but it is a sure-shot way of falling into a debt trap. Taking out many loans could result in over-leverage and increases the risk of you getting trapped in debt, both of which could be devastating for your future financial security and your credit score.
Making direct inquiries about loans with lenders
People applying for ICICI bank personal loan should refrain from asking lenders directly about credit cards and loans because credit bureaus view these inquiries as hard inquiries. This refers to credit report requests made at the request of the lender to assess the creditworthiness of loan applicants, which might reduce your credit score by a few points. Instead, those looking for personal loans could visit an online financial marketplace to analyze available options and pick the best one. Any credit report inquiries you make through online financial markets to narrow down the best offer are regarded as soft inquiries (self-initiated credit report requests) and, as a result, have no bearing on your credit score.
Changing jobs frequently
Personal loans are frequently given to borrowers with steady employment. Lenders also take into account the length of your current employment when granting a larger loan amount. Therefore, you should refrain from changing jobs frequently if you are considering a home loan or a higher amount of personal loan in the near future, as it could come across poorly to lenders.
Check your DTI (Debt to income ratio) and make sure it isn’t high.
A DTI ratio that is too high can be another issue that lenders might object to. This ratio evaluates your total monthly debt to your gross monthly income. You can check your balance via ICICI bank balance check number or your respective bank’s number. Your DTI ratio would be 60%, for instance, if your monthly debt payments are 30,000 and your monthly income is 50,000. A high ratio like this could indicate to lenders that you are unable to pay back your debt. Because of this, it is recommended to strive for a DTI ratio of 35% or below, which is generally seen as favourable. You’d have a better chance of getting the loan approved that way.
Points to Note Down
- Do you know bankers calculate the fixed monthly obligations to net monthly income ratio? They look at your monthly income before approving a loan. You can also check your balance via the ICICI bank balance check number. They do this to see whether the ratio falls under the bracket of 40-50%. To reduce your chances of facing rejection, estimate your loan amount eligibility beforehand and apply for the loan amount within the eligible loan limit. Another thing you can do is opt for longer tenure loans which mean lower EMIs and low FOIR, which improves your chances of getting approval for your loan.
- You also have the option to opt for longer tenure loans, which means lower EMIs and hence lower FOIR, which again improves the chances of approval of ICICI bank personal loan application.
- It is suggested to take a mix of secured and unsecured loans that gives your bank the assurance that you will pay the loan amount on time.
- You can also apply with a cosigner for an ICICI Bank personal loan. Tell them to check their bank balance using the ICICI bank balance check number or from their respective bank’s portal, and if they have a sufficient amount in their bank account, you can jointly take an account. Your chances of getting rejected for a personal loan can be reduced, and you may be able to get a better interest rate if you have a cosigner with decent to excellent credit.
Conclusion
The reasons we have mentioned above are some of the aspects behind loan rejection. There could be many reasons and factors that can get your loan application denied. Thus, as a borrower, make sure your credit score is high, you have a low debt-to-income ratio and you have sufficient income. Fulfilling these criteria will ensure your loan application doesn’t get rejected.