Factors affecting your eligibility for a Personal Loan

Factors that affect your eligibility for a Personal Loan:

Personal Loans are a much-preferred financial solution that allow individuals to borrow money from banks and other financial institutions. These loans usually come with no end-use restrictions and can be used to meet many purposes such as home renovation, travel, medical emergencies and debt consolidations to name a few. While a Personal Loan exists for anyone earning legitimate income, not everybody is eligible. If you’re looking for a Personal Loan up to Rs 50,00000, you need to understand the eligibility criteria and the factors that affect your application before you apply. This blog will take you through the basic eligibility criteria for Personal Loans at ICICI Bank.

Factors that affect your eligibility for an ICICI Bank Personal Loan:

Salaried and self-employed individuals can apply for an ICICI Bank Personal Loan. Here are the basic eligibility criteria, to avail the best deals.

Credit Score:

Your Credit Score plays a major role in your eligibility for a Personal Loan. Every lender (including us) will consider this score while evaluating your eligibility for a loan. A Credit Score is a 3 digit number representing your creditworthiness based on your credit history. A high Credit Score indicates a good history, that you’re a responsible borrower who will make timely repayments, making you a low-risk bet. At ICICI Bank (and for most well-established lenders), we require a credit score of 700 or above to approve a Personal Loan application, for both salaried and self-employed applicants.

Income and Employment:

Your income and employment stability are equally significant factors in determining your eligibility for a Personal Loan. Any financial institution will evaluate these to assess your current repayment capacity and future financial stability. Generally, salaried individuals with stable jobs and a regular source of income are considered to have a good profile. The minimum monthly salary required varies based on a few factors. At ICICI Bank, a salaried professional with a minimum monthly salary of Rs 30,000 is eligible, which can differ depending on certain factors.

Self-employed individuals too must show a steady source of income and a profitable business to be eligible for a Personal Loan. If you fall in this category, you have to submit Income Tax Returns, Salary Slips, Bank Statements and other income-related documents to verify your income and employment. ICICI Bank requires a minimum turnover - Rs 40 lakh for non-professionals and Rs 15 lakh for professionals, to be eligible for our Personal Loans for self-employed individuals. There is also a minimum profit after tax at Rs 2 lakh for proprietorship firms & self-employed individuals and Rs 1 lakh for non-professionals.

Age:

Your age determines your eligibility for a Personal Loan too. Borrowers should be within a certain age group, as they will be considered more likely to have stable income and repayment capacity for longer. At ICICI Bank, a salaried applicant should be at least 20 years old and not more than 65 years old at the time of loan maturity. For self-employed applicants, the minimum age is 28 years, 25 years (for doctors) and the maximum is 65 years.

Older applicants need not worry about more scrutiny from our end. A few additional documents are all that one needs to prove repayment capacity.

Loan Amount and Tenure:

Your desired loan amount and tenure are other factors that affect your eligibility for a Personal Loan. Most repayment tenures range from 1 to 5 years. But with ICICI Bank, you can choose anywhere between 1 to 6 years. If you’re looking for a higher loan amount, you may also need a higher income and a good credit score.

Work Experience:

The number of years you’ve been working or been in business will also be factored into your Personal Loan application. Salaried individuals need a minimum work experience of 2 years in their current job, while the self-employed, need to have been in business for at least 5 years, 3 for doctors.

Other factors that can be considered for Personal Loan Eligibility:

Pre-existing Relationship with the Bank

We do our best to bring customers the best deals. While many lenders do not give Personal Loans to self-employed individuals, we do! One needs at least a one year liability relationship (with a Current or Savings Account) with us, an active or successfully paid-off loan in the last 36 months.

Debt-to-Income (DTI) Ratio

This is the ratio of your monthly debt payments to your monthly income. A high debt-to-income ratio indicates you have too many financial obligations relative to your income, which may affect your eligibility for a Personal Loan. Usually, a less than 40-50% ratio is viable.

Existing Debt

Your existing debts are another factor. If you have outstanding Loans or Credit Card balances, it may affect your repayment capacity and hamper your eligibility.

In summation:

A quick Personal Loan can be a great financial asset to meet any immediate or unplanned financial requirements. As a borrower, you must understand the eligibility criteria and other factors that affect your Personal Loan application. If your current standing does not get you good Loan deals, take the necessary steps to rectify the situation.

Start by evaluating your financial situation, move on to improving your credit score, reduce outstanding balances and finally maintaining a stable income and employment. This will increase your chances of approval for Personal Loan offers not just from us, but from any lender.

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