Why you should change or lose a few habits to improve creditworthiness?

Banks are always in the urge of giving out loans to people. The more loans they give out, the more they can earn through interests. On the other side of the game, we consumers are always in need to some loan or the other. There are needs and wants of ours which can only be fulfilled through getting a loan, needs like medical emergencies and maybe wants like buying a luxury car or purchasing a house. If taking a loan is that important, what are the criteria’s which are important to avail any loan.

Your total experience, the company in currently work in, your salary, your existing lines of credit and many more are the criteria’s which you need to adhere when it comes to availing a loan. The most important of all, which determines if you can have a loan with ease, is the credit worthiness. How do you know if you are credit worthy? When you apply for a loan, the banks with other verifications conduct credit verification and check your cibil score. A credit score is a number which represents how you are doing financially.

There are lots of things which add up to your cibil score. Sometimes the credit score is perfect for a loan or a financial product to avail and sometimes you have to work hard to improve cibil score. Improving your bad credit score is a very long way to go and also you will have to look after not to fumble on your way.

Here are some tips on do’s and don’ts to get your score up,

Don’ts

Late payments

This is the most basic practice you can do when it comes to getting your credit score up. Understand your finances and adhere to due dates of your existing line of credit and loans.

Do not carry big balances

Keep your credit utilizations low, let’s take a number here. If you have a credit card with a limit of 1, 00,000 rupees, make sure you only use 40% of it. This will not only keep a cap on spends, but will also help you get your score up.

Defaulting

Do not default any loan and get it to a non-performing account. A non-performing account will not only hamper your cibil score, but will stick to your credit report for a very long time and will make it difficult to get a loan.

 

Do’s

Check your credit file frequently

If you are one individual who has multiple loans and credit lines on your name, you must check your credit score frequently. Sometimes, the credit bureaus make mistakes on your report and you are the one who tends to pay the price for their mistakes.

Create a healthy relationship with your bank

Your banks are the one who send reports to the bureaus on a frequent basis which adds up to your credit score. if you happen to skip a payment or two, you can explain your situation to the banks and they can on their discretion give you time to make the payment to avoid the loan defaulter list. Not only credit wise they can also help you with speedy loan process, if you are in need to one.

Use variety of credit lines

If there are multiple credit lines towards your account, here are high chances to get your credit score up in no time. More the credit lines and loans, more you will be looked as credit worthy and the one who takes their financial seriously. Just do not default any payments as this can work vice versa.

Just by improving basic financial habits, you can help your credit score grow in a positive way. Simple financial integrity can help you in many ways you can imagine.

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My Credit Score is 500. Things You Should Do Now

Well first things first, a credit score of 500 is not good news. However having said that, do keep in mind that it is also not the end of the world! As you may be aware credit scoring is done on a scale of 300 to 900 and higher the score is, the better it is for you. Any score below 700 could spell trouble if you are looking at getting a loan sanctioned or even getting a new card or a job. So if you are reading this, it means you are looking at working on your score and trying to make it better.

  • Get Your Credit Report:

Even though you know that your score is low, not much can be done till you get a thorough look at your credit report. The credit report gives a detailed and comprehensive view of your overall debt position and also lets you analyze your credit history. Going through your credit report will help you identify the cause/s for your score being low. You may sometimes be aware of the problem but it is always better to get the report and identify the reason/s for the low score. A score of 500 will not be caused due to a few missed payments or excessive use of credit card in a month or two, the cause is likely to be more serious.

  • Clean Up Your Act:

Going through your report will let you identify the problem areas that are the cause of the low score. Once you have that information you need to start working on these aspects. So if you have an open loan that you have paid fully, then get the NOC so that it is closed in the credit report too. Pay old dues but make sure the accounts are reported as closed and not settled; a settled account will raise red flags in the minds of all future lenders. If you have been irregular in paying your dues, going forward you need to start paying on time as this is the most important component of CIBIL score calculation. Also keep a look out for any erroneous reporting that may be causing the score to dip.

  • Have a Disciplined Approach:

Once you have zeroed in on the cause of the low score and how to deal with it you need to have a disciplined approach if you want your score to improve. If the cause is high credit utilization ratio then you need to exercise restraint when using your credit card. You need to fix a limit to your credit card usage and then you need to stick to it. The same applies to paying your dues on time, as we said above this aspect influences the credit score to the maximum extent. Make sure you pay all your EMIs and card dues on or before time, always!

  • Be Patient:

Another aspect to bear in mind is that credit scores do not improve or go down overnight. The score is a reflection of your credit history which starts from your first card or loan. So if you have been an irresponsible borrower in the past and are looking at improving your score, bear in mind it will take time especially if your score is 500. Being disciplined and patient are keystones of improving your CIBIL score, so be responsible in the future and don’t hope for miracles. Though loan for low CIBIL score is an option offered by few lenders yet it is not advisable to do so as it can cause further damage to your already strained credit health. Wait for the score to improve before you go out looking to borrow further.

  • Seek Professional Help

You can definitely try to improve your score on your own but if you feel that things are too complicated or you are unable to identify the cause of the low score then you can seek professional help in trying to improve your score. Here it is important to remember that no one can remove any negative item from your report, professionals can only help you identify the problem and offer you a solution. Being disciplined rests on you, they cannot offer you quick fixes but they are better equipped to deal with such situations. .

As we said earlier, though the score of 500 is low and is definitely a cause of worry, however there is no reason to despair as you can work on improving it.

This is why you should track credit report to maintain a healthy record

Are you a health freak? Are you one of those who wake up at 5.30 in the morning and goes to work out on a daily basis? Have healthy food throughout the day and is rigorous about maintaining the perfect health? If yes, have you ever thought of your financial health? Isn’t that important as well? A healthy financial health will lead you to money miracles and if failed to adhere it can cause you a lots of problems.

What is the main essence of a good financial health you ask? It’s nothing but a good credit score. A credit score is a representation of your personality in eyes of a lender on how you are doing financially. There are ranges of credit score which will determine if you are credit worthy or not. You will pray to be on a higher of the score as it opens lots of doors to financial products to avail.

Here are some tips on tracking your credit report and maintain a healthy record,

Know your credit score

Many people make this mistake and never check their credit score on the first place. They only happen to know this term when they are applying for a loan or a financial product. Get your free cibil report and check what your score looks like. Is it bad, good, worse how much do you need to work on the same?

Keep a track

Your financial transactions are recorded frequently by your lenders to the credit bureaus. These transactions are like a summary of your financial well being and how your future lender will see you. It’s important to keep track to understand if the actions are helping you improve your cibil score.

Fix your details

Credit bureaus tend to make lots of mistake while entering your transactions towards your account. You need to check and report any errors you see when it comes to the transactions on your report. Not only transactions, but every details like your name, surname is to be rectified as this can lead to major problems like identity theft.

Only borrow what you need

When it comes to availing a loan or a credit card, always check your requirement. Do not avail more than you need as this will cause you a lot of damage financially. Just because people have pre-approved loans and open credit, they misuse their finances and then face lots of issues financially. If you think you happen to have a lot of open credit accounts than you need, try closing them with ease and try buiding a secured financial future.

Be smart when applying for a credit

When you are applying for a loan, it’s tempting to apply towards a few credit providers just to see how the market can favor you while applying for a loan. This practice can not only deny you a loan, but can also take a toll your credit score. When you apply for different loans or credit cards every enquiry is counted as hard enquiry and is recorded on your credit report. These enquiries stay on your report for a very long time and are visible to your future lenders that you made multiple applications to avail a loan in the past.

Do not miss on any payments

Life is tuff, we understand that and due to unconditional situations, you may miss on payments. Do not do that! It’s really important to make all your payments on time and maintain that financial integrity so that your credit score is maintained and you also don’t encounter any late fees and penalties.

Maintaining a healthy record sounds like a lot of work, but it can be a savior when it comes to availing a financial product. Few simple steps towards maintaining a good finance can help you in many ways you cannot imagine.

Can unused credit cards impact your credit profile?

Credit cards have become an important part of our lives. With various options and lucrative offers available, it becomes so difficult to choose what fits best for our needs. From various offers on dining to broadways, air miles, reward points, shopping experiences and what not is offered in various types of credit cards. But, technically, when we opt for too many credit cards with an individual offer, it can be a possibility that we may forget some.

Let’s understand this with an example. Priya was a very passionate young achiever at a good position in an MNC. She has achieved a lot in that young age. Obviously, with that age and that position, she was on cloud nine! With that age, she was also attracted to those offers of the credit cards which the banks had offered her. Some credit card with air miles offer, some had dining offers, some gave her amazing reward points and what not! Now when she had more than five cards, at times it becomes difficult for her to manage. So, eventually, she picked two best of cards which could give her maximum benefit and rest she kept aside.

Now, she did not close those credit card accounts and thought that would work as she wasn’t using them. After a year or two, she wanted to buy a house and planned to apply for a loan. To her surprise, her loans were getting rejected as her CIBIL score was not up to the mark. The question may arise is, what is CIBIL score? And what is it’s an effect on loan sanction? A CIBIL score is a 3 digit number that ranged from 300-900 where 900 is highest and 300 is lowest. It is determined by five factors. Payment history, an amount owed, length of credit history, type of credits and new credits. Any loan or credit applied for is the major reason why and how the score is what it is. Higher the score, more are the chances of loan application getting approved. How is this score diversified? 750+ score is always considered a good score. Anything between 600-750 is average score and anything below that is not considered a good score or we can say a bad score.

Priya, when wasn’t using her cards, she forgot the fact that each credit card has yearly charges. When not paid, they can keep on getting added to your account, in turn, adding more amount to it as delayed payments and added interest charges. What she couldn’t figure out, and because of delayed payments of that or we can say missed payments this amount kept on increasing which decreased her score and getting the loan application rejected!

What did we get from this example? At times, when we decide to not use the credit card anymore, we must either close the account or if for length of the credit history if we want to keep that open, every six months, we must check are CIBIL score, and the report in order to get an idea if we are not missing on anything which is making outscore low! We should always remember that the score can take no time to go low, but will require more time to get it on track. You must be paying all the credit bills on time, you must not be missing on any EMIs that are scheduled, but an unused credit card’s yearly surcharges may just drag the score down.

Always remember, an open credit account will have its repercussions, so either one would close the account they aren’t using, or if it is kept open, the yearly fees or are other charges should be taken care of and paid. Especially the once of unused credit cards!

Smart investment tips to buy a Property

Planning is the key to everything we do in life. If you have a goal in life, be it short term or a long term, a proper plan can help you achieve it. Speaking about plans, we happen to have a lot of dreams which we would like to achieve someday or the other. Dreams like buying a high end car, an expensive phone, shopping for branded clothes, etc. These are dreams which you can fulfill with a small amount of planning and management and there you go! Dreams fulfilled! Is this the case with every purchase in our life?

Here we are talking about buying a home. Buying a house is a very lengthy process and takes a lot of your attention. For many of us, it’s a luxury we cannot afford. In some cases, by the time we reach to a decision to buy a house, the property becomes expensive or else the funds get exhausted. There is something or the other stopping you to make your dream purchase. For buying a property you need a proper plan which includes your budget, place of property, is there a co-borrower you can count on? Home loan options, you need to do a thorough research on which lender would be the best as it’s a long term commitment when it comes to home loans. HDFC Home loan gives you the best interest rates and less processing fees with speedy approvals.

After all the necessary research done by you, you decide on a property and start making the necessary arrangements to purchase the house. The very first thing in the home buying process is to make a huge down payment. You are prepared for it, but at last moment there are some additional charges and without digging a huge hole in your pocket you won’t be able to make the purchase. This leads to dropping the plan and again you are at ground zero.

It’s a total nightmare to see your dream property slipping out of your hands. Now you think you must have started making some smart investment for such a day. Thinking to start making smart investments, we will show you how,

Start early

Buying a house is almost everyone’s dream. Find you calling at the earliest and start saving for a good down payment for the house. On the other hand, if you apply for a loan at the early ages let’s say in your 20s and 30s, the bank will give you maximum loan amount with long tenure up to 30 years. By doing this you may end up paying very less down payment.

Start fixed deposits and recurring deposits

This may look funny, but this helps a lot. We happen to spend a lot on unwanted things and end up having no savings for future. By opening deposit accounts, you can start saving a lot of money. This way, you can minimize your spends and start saving for the deposit account. This savings then helps you make a huge initial payment if needed.

Invest in SIP Mutual funds

This is one more thing you can do to save money to buy a house. SIPs promise you a good return between 10-18% returns depending on which type of fund you are selecting and the tenure associated to it.

Start working on your credit score

The most important thing when it comes to buying a house is that you will need financial aid from a bank or a home loan lender. Make sure to have a good cibil score before you apply for a loan to get the maximum out of a loan buying process.

Every step you take to buy a house gets you one step closer. Just make sure the steps you take will help you in the long run as this is a long term commitment and you need to prepare for the same.

Find Out Why and How to Start Building a CIBIL Score?

What will you do if you find yourself in a cash crunch one day, and you don’t have any savings left? Chances are that you will apply for a small loan. But do you know that your application can be easily rejected if your CIBIL score is poor?

Your CIBIL score is the most important factor that banks and NBFCs consider when they evaluate your loan application. So, you need a high score if you want a loan, especially at a lower interest rate. This brings us to the main question- how can you improve CIBIL score?

The first thing that you need to understand is that no matter how poor your score is today, you can improve if you are willing to do the work. You may not get the desired results within days, or even weeks. However, if you are committed and take the right steps, then nothing can stop you from building an impressive credit. All you have to do is take the following steps:

1. Check Your Report

The first thing you need to do before you can start working on your CIBIL score is checking your credit report. Only then you can see what your current score is and how much work do you have to do to increase it to a decent level (a score that’s equal or above 750 is considered good).

You can also go through other important details in the report which include personal details, previous loan’s details, repayment history, income, etc. If you see any mistakes in these details, then you can have them corrected which will improve your score.

As per RBI’s norms, you can receive one free CIBIL report every year. Although you can get your report as many times as you want for a small fee. You can check CIBIL’s official website for more details.

2. Start Using a Credit Card

Using a credit card is one of the simplest and most effective ways of improving credit score. This is because when you use a card and pay the bills on time every month, then it builds trust and increases the score. Plus, you can save money too as many credit cards offer perks like cash back offers, discounts, reward points, etc.

3. Checking Credit Utilization

If you are already using a credit card, then check if you are spending more than necessary every month. Ideally, your credit utilization shouldn’t be more than 35%. For instance, if your credit card limit is Rs. 1 lakh, then you shouldn’t spend more than Rs. 35,000 per month as it affects the credit negatively which you can easily verify through a copy of your free CIBIL report.

If you need to spend a lot of money with credit cards every month, then it’s better to get multiple credit cards. This way you can lower your credit utilization without compromising with your spending habits.

4. Get a Joint Loan

Apart from credit cards, small personal loans and home loans also help in building a credit score. Although you should try to get a loan all by yourself, if you are having trouble with that, then you can get a joint loan instead.

When you apply for a loan with a co-applicant, especially if they have a good credit history, then it’s easier to get a loan. However, the benefit of repayment in terms of credit score is shared equally between the borrowers. So, when you take a loan with someone who has a good credit, then you can improve CIBIL score along with them using their merit.

So, there you have it- some of the most recommended tricks that you can use to build credit. However, there are a few other things that you should keep in mind. For instance, you should never become a loan guarantor for someone who you don’t fully trust even if they are a family member. This is because if they fail to repay their debt, then you can greatly hurt your own credit score. Also, never underestimate the consequences of late payments. Whether it’s credit card bills or loan EMIs, every single payment should be made on time if you want to improve your score faster. Good luck!

Patience is the key to rebuilding your credit score after bankruptcy

What is bankruptcy? Bankruptcy is a state where the borrower who has borrowed the money from a bank or any financial institution, puts the hands off from the credit or the debt that is taken and denies to pay it anymore. There are two types of bankruptcy. Wilful bankruptcy one where the borrower says that he or she does not want to pay the debts anymore because they do not have adequate funds to repay the debts even after considering that all the property or assets which they have been diluted, the loan amount still is much higher than it. And the other one is where the borrower says with his or her wish that they will no longer pay the balance amount of the loan and want to declare the bankruptcy.

In either of the case, if genuinely the borrower has no money or if they do not wish to pay the money, the bankruptcy will be reflected in CIBIL Report. Once the bankruptcy is reflected in the report it will take seven years to start it again. For the next seven years the individual will not be able to borrow any loan or credits from any banks or NBFCs or any financial institutions. By that that what they can do is, if they have any secured type or credit like secured credit card: where FD is kept against the credit taken and just in case that if the borrower denies paying the bill, the amount can be deducted from the fixed deposit that is kept against the credit card, or any of the loan which has collateral like gold loan or home loan where the asset is there against the amount can be tried to apply for. In such cases, eventually, even if the credit score is on the toss, they still can say that the history of past years on other credits has been taken seriously.

Bankruptcy has a huge effect on credit score. It’s like the “it will take a decade to be okay” thing. As said earlier, it will take 7 years to get that title off the report. But along with this the name also will reflect in loan defaulter list. With multiple attempts and many years of serious practice of repayments of the credits that will then be taken may change a bit. Even in the usual case when the score dips, patience is the first thing one has to keep to get the scores up. It is not difficult to get the score above average. That comes with a question what is a good score? So, credit score is a 3-digit number, ranging from 300-900. any score which is 750+ is considered a good score. Ranging between 600-750 is an average score and the lesser than 600 is into the poor score.

Bankruptcy comes under the negative flag which once tagged, takes many years, seven specifically to get it out of the CIBIL report. Get it out does not mean that after 7 years the entry will be marked off and will no longer reflect the report but it means that the effect it has on a report which will not allow the lenders in usual cases to approve the credit application will go mild. Also, with all the patience and the hard work one must show in the other credits they have had in past years will show up in the report.

It is understood that a decade is definitely 10 years and will take a lot to again get that score back to 750 or more, but the event of a bankruptcy is that huge. Patience is all one can keep so as to make the effort and be diligent in repaying the new credits on time without delay or the missed payment and the hard work will surely pay off!

Pay Your Credit Card Bills Before Due Date to avoid low Credit score

Who is a responsible person? An individual who is always taking care of the liabilities that are on him/her. When we talk about a financially responsible person, is the one who is able to keep a balance between the spendings and savings. Further bifurcating, a person who has applied for any type of credit is responsible when he/she makes the regular payments of the credit that they have taken. And when it comes to a credit card, it’s the one who pays the credit card bill in full amount on or before the due date. The question may arise is, why?

A credit score is an important aspect of today’s lifestyle where many of the people work on credits, Credit Cards, and loans taken from financial institutions like banks and NBFCs. The credit score is determined by five factors, Payment history, Amount owed, Credit mix, New credit and Length of credit history. Here, the most import and the highest weighted parameter is Payment history. It consists of 35% of the whole score. One may check the score from any of the credit bureaus that are established in India viz. Transunion CIBIL, Experian, Equifax, CRIF Highmark, they have the same score of 35% for payment history. Paying the bills of the credit cards and paying them timely shows that the borrower is accountable and serious about the credit that he/she has taken and the leverage that has been given to them.

Some may say that a few missed or late payments do not make a much difference. But, one should never listen to them. If not initially, but definitely eventually the credit score will get affected. Because eventually it will be a habit and then the score will take huge dips. There have been many examples that few missed and delayed payments a decade ago, which are obviously reflected in the credit report affected on the approval of bigger loans like home loans or business loans now. They either were not able to get the loan approved because of the small careless attitude a decade ago and they were to end up paying a huge amount of interest as they had Low CIBIL Score. The score ranges from 300-900 where 900 is highest and 300 is lowest. 750+ score is a good score, 600-750 is considered average and any score below 600 is considered low or bad score!

Let’s understand this by one of the examples. Sanjay, A 34 years, IT analyst is a project manager in a reputed firm. He has been living away from the family since he was 18. I.e. much sooner as he completed his 12th-grade studies. He did his bachelors and started working at the age of 21. he got the credit card when he was 22. He then took an education loan at 25 and persuaded his masters. First few months were okay as he had saved while he was working. But, later at the end of the third semester which is a year and a half after he started doing his masters, all his savings were exhausted and he then started to use the credit card. Since there was no source of income and he did not want to ask his parents, they were almost seven to eight months where he either was paying the only minimum due or sometimes skip paying the bills or multiple late payments. He knew he was not doing correctly. So he went to the bank and asked them to close the account and then forgot it. Much later, when he was 32, he wanted to buy a house and so he applied for a home loan. And when getting it rejected he checked his credit score and credit report. He had Low CIBIL Score and the major reason was that card which had applied to close it for. It took him two years to get the score in level and had to anyway pay that amount plus the interest that was charged for these many years!

So, if you have a credit card or you may have credit cards, make sure you do not make defaults or do late payments or miss few payments as it will affect the credit score and that will be always reflected in credit report!

Is it easy to get a Credit Card for a Self-Employed Person?

You are standing at a store, with all the things you wanted to buy, waiting for your number to pay and collect all kinds of stuff and leave for home. While counting the money you have there ate 2100 Rs less than the total bill that it is. But whatever you have bought is all important at this hour you cannot drop any item of the one that has picked. Now? There have been many situations like these were just for few of bucks you would have to think now what?! it’s like that embarrassing situation where you really can’t think of anything cause borrowing or asking from someone for the cash is odd!

Credit cards work best in such cases. Credit card as we all know are a boon where we have the privilege of using the money that we do not possess right now! You use the money now and pay it later. In usual cases the next month and if it is in EMI module of a few purchases that you pay it in the monthly small amounts divided by the merchandise company. But the whole point is that it’s not at the same moment. So while having the emergency it’s best to have one. Now the question is: how to get a credit card? Who can apply for it? Or can everyone get it? There are certain criteria for the approval of credit cards.

1. The primary holder of the card should be 18+ in age

2. The applicant should either be a working professional or self-employed with a regular source of income

3. There should be a saving account on his/her name

4. There should not be any bad defaults that must have been made in past

With these criteria, the credit score is also one of the factors that are checked before getting a credit card approved. The credit score is established only after having a credit for six months, so what if someone who has never applied for any type of credit or they have not taken any loan? With the fixed income of a few months and checking other parameters, the credit card can still be approved even after having no credit score. It might not be the one with a huge credit limit, but a one with basic credit limit can be applied for and will get approved. Also, the usual credit cards and an unsecured card where the credit line used is first paid by a bank to the purchase place, and then the user pays it to the financial institute. However, there is an option called as a secured credit card. In Secured type, the applicant has to keep a fixed deposit of the amount which they want the card limit to be. Any bank will approve this credit card as they do not have a risk here. Even if, just in case the cardholder do not pay the credit used, they can always get it from the fixed deposit that is been made.

Coming to the topic if a self-employed individual can get the credit card easily. 2 things. A. If they are planning to get a secured credit card, that is no brainy. They will easily get it. B. if the income of a self-employed individual is very much constant from a long time, they will still get it pretty easily. But, what if there is no constant income or the self-employed individual has just started? In such a case, it becomes a little difficult to get the usual unsecured type of credit card as a primary holder.

In such scenario, they can always take a secured credit card for starting and after it’s regular usage and repayment they can always talk to the bank, ask them to check the report and get the normal credit card approved and that will be quite easy!

Application Checklist for you before Taking A Loan

Personal loan is a very convenient way of borrowing money from banks and NBFCs to meet any immediate financial need. The process is extremely fast and simple provided you have all the documents required in order. Since personal loans are unsecured, banks need to ascertain the credit risk associated with the borrower before sanctioning the loan. They approve of a certain loan amount depending upon the repayment capacity of the borrower. They require you to submit proof of income and some other important documents to ascertain your eligibility for the loan.

There are some important things that one must take care of before applying for a personal loan. Here is an application checklist that will guide you if you are availing for the personal loan for the first time.

Checking the credit score

Since banks use your credit score to determine your eligibility for the loan, it is a good practice to check your score yourself first to know your chances of approval. Order your free credit report from any of the three credit rating agencies to analyse your credit standing. Having an excellent score helps in instilling confidence in the lenders and bargain for an attractive rate of interest. However, if you don’t have a very good score you can opt for personal loan without CIBIL score that are available at exorbitant interest rates.

Finding the Eligibility criteria

Different lenders take into consideration different factors to ascertain a person’s eligibility for the loan. Find out the eligibility criteria of the specific lender with whom you wish to apply for the loan. Check the parameters like age, occupation, income and credit score before proceeding with the application. Get a list of documents required so that you have all the relevant paper work when you apply for the loan.

List of required Documents

Contact your lender and get a checklist of the documents that you need to submit along with your application. The requirements of the documents vary based on the profession, income and loan requirements. However there are some common documents that you must have in handy. For an ICICI Personal loan you may require

  1. Valid Proof of identity- A copy of passport, PAN Card, Voter Id Card or driving licence serve0s as a proof.

  2. Proof of address – Copy of passport, Aadhaar card, rental agreement, utility bill, ratio card.

  3. Proof of Age

  4. Financial documents

  • For salaried employees- Bank statement for last 6 months, Salary slips of last 3 months, Form 16 for last 2 years, Employment certificate or appointment letter

  • For self-employed Individuals- Bank statements of savings and current account, proof of office address, ownership proof, Income tax returns of last 2 years, detailed financial audit including Profit and Loss statement and Balance sheet. Since the source of income of self-employed individuals is riskier than that of salaried individuals, these documents help in providing an assurance to the bank that they have a steady inflow of funds.

  1. Passport size photograph

Since personal loan is unsecured in nature, the lender verifies the documents thoroughly to make sure that the borrower has the capacity to repay the loan.

Interest rate charged

The rate of interest determines your monthly EMI on the loan. Find out the best rate that you can get. Also look at the processing fees, late payment charges, prepayment fee etc. It is important to have a clear understanding of these charges before you apply for the loan.

Repayment plan

Use the EMI calculator to plan your repayment in advance and choose a tenure that suits your budget. Take into consideration any major changes in your income or expenses that you expect in near future. Being realistic helps in avoiding any future defaults on loan that may adversely affect your CIBIL score.

Taking care of this essential checklist will ensure that you get approved for a personal loan at good terms and rate of interest.