How Does Your Loan Repayment History Affect Your Personal Loan Eligibility?
Have you heard of loans that can be used for multiple purposes?
A personal loan
is the only type of loan that, when taken can be used for many purposes and it can be our saviours all the time. They are unsecured loan types, which do not require surety or collateral to be placed with the lender.
For what purposes can a personal loan be used?
As we already know personal loans can be used for various purposes. Let us look at a few of them for which purpose we can use the loan amount.
1. Education loan: Education shouldn’t be interrupted because of money. You can avail personal loans for further studies and cover expenses like college fees, hostel stay, books, and other expenses. With this loan type, you can not only pay college fees but can also cover other expenses too.
2. Medical emergency loan: Everyone has insurance that covers the medical expenses only to some extent, then what about the rest of the expenses that have to be paid. Personal loans come as a saviour when you don’t have enough money in hand, this loan will cover expenses for treatment, surgeries, hospital bills.
3. Wedding loan: These days weddings are getting more costlier and grandeur. For a person who is out of money but yet wants to have a grand wedding, then his only option is taking up a personal loan. This covers all the wedding expenses and makes things go smooth at the wedding.
4. Holiday loan: Holiday loans cover the expenses of the total vacation. You can avail a personal loan for your holiday trip and visit your dream place.
How does a loan repayment history affect personal loan eligibility?
We have eligibility criteria for a personal loan that will affect the approval of the loan. Let us look at the main reason why many loans are not approved by the lenders.
Your loan repayment history can be the biggest reason for your lender to reject the loan application. Your past repayment history will be stored in your credit report. If you have missed a payment, then that will reflect in your credit report and will affect your credit score. The credit score is the decider whether you are eligible for the loan or not. In India, the Credit Information Bureau of India Limited (CIBIL) will have all the records of the payments made by the borrower towards the loan and credit cards held by the people.
If you have default repayment history, then that will affect your credit score and you will have fewer chances of getting the loan approved. And if you have no default in your payment history, then your credit score improves which will increase your chances of approving the loan application without any issues. Your score gives the lender an impression on whether you will do the payment on time or you will miss the payment. Based on your creditworthiness, the lender will decide if he should lend the money to you or not.
So, in order to get your loan approved, you need to make the payment on a timely basis and not skip them.
We have other eligibility criteria also that will decrease the chances of loan approval, every criterion is as important as the other ones. So, make sure you fulfill all the criteria for smooth processing.