Personal Loan

5 Factors That Can Decide Your Personal Loan Approval


A quick personal loan is your best bet if you need urgent money to cover unexpected expenses. All that’s required to get a personal loan is an internet connection or a mobile phone. That’s because both websites and apps are available.

Make sure you’re eligible for a personal loan by meeting the lender’s requirements. Getting a personal loan to suit your financial needs can be challenging. It is even more challenging if you don’t meet all the qualifying conditions.

5 factors that impact your personal loan approval

Personal loan approval depends on the following five criteria:


If you’re looking for a personal loan, age is the most important factor in determining your approval. Lenders care about your age very much. That’s because it provides them with information about your repayment ability and finances.

Your age will reduce your earning power in your twenties. Similarly, if you hit the 60-year-old mark, your income potential may drop again. Individuals aged between 25 and 55 are the ideal people for personal loans.


Your CIBIL score reveals information about your creditworthiness. This includes the amount you’ve borrowed, how you’ve paid it back, and if you’ve defaulted on any loans. The amount of a loan you can get and the interest rate you’ll pay are both determined by your CIBIL score.

You should be able to meet the eligibility requirements and get a quick personal loan. But that’s only if your CIBIL score is 750 or above.

A CIBIL Score of less than 750 may result in loan application rejection. Or, it can result in a higher interest rate. Lenders will have more faith in you if your credit score is high. A high credit score implies that you are adept at meeting financial obligations.

You can do several things if your CIBIL score is below 750. For example, make on-time payments on all your loans. Or, you can get rid of any outstanding collections or judgments.


The ability to repay your loan each month is a key factor that lenders look at before approving your loan. This will give them a good sense of whether they can expect you to repay the loan within the allotted time frame. Income is an essential factor in determining your repayment capacity.

But the minimum income requirements vary from one lender to the next. The lender will look into your home and business to see how much you make. Lenders feel confident in your repayment ability if they know you have stable finances.

Work Experience

A borrower with more work experience will be better financially able to repay the loan. Someone just entering the workforce will not be. Yet, the minimum amount of experience required varies from lender to lender. Also, it depends on the nature of your intended career and other considerations.

In most cases, you need at least 3 to 5 years of relevant work experience for a salary-based position. Business owners need five years of experience. Self-employed professionals must have three years under their belt.

Job Stability

Lenders often look at borrowers’ employment histories to decide whether they are a good risk. Suppose you want to qualify for a personal loan as a salaried worker. 

In that case, you must have worked full-time for your employer for at least two years. If you’re self-employed, you’ll need to prove that you’ve been making money for at least five years.

Lenders will likely grant you a loan if they see that you have a good credit history and if you’ve remained at your current job for an extended period.

Thus, lenders rarely give loans to people with long gaps in their employment history. Or to people who have frequently changed careers.

Lenders will charge higher interest rates to those with poor credit scores, even if they get a loan.

How to improve your chances of getting approved for a personal loan?

Personal loan approval from NBFCs is quicker due to the easy terms and conditions. And same-day deposits of loan proceeds are common.

Still, your loan application could get denied if you don’t meet the requirements.

To increase the likelihood of getting a personal loan, consider the following advice:

Improve your CIBIL score

If your CIBIL score is poor, you should work to raise it before proceeding. For unsecured loans, a credit score of 700 or more is necessary.

Improve your credit score by making on-time payments. Also, don’t use more than 30% of your available credit at any given moment.

Reduce your monthly loan payments

Your loan application will likely be denied under certain circumstances. For example, if your monthly loan payments are more than half of your monthly take-home pay. Pay off your credit card balances and any outstanding loans to reduce your debt load.

Review the List of Necessary Documents

You must provide valid documentation to get approved for a personal loan. For example, a driver’s license, PAN, passport, Aadhaar card, or voter ID card.

Also, self-employed candidates must provide income tax returns and the previous year’s turnover. They must also give proof of business. At the same time, salaried people must provide their most recent pay slips and employee ID cards.

Meet the eligibility requirements.

Lenders prefer applicants who work for a public or private MNC. Also, the applicant must be a citizen of India, aged between 23 and 55, to qualify for a personal loan.

Request a Reasonable Loan Amount

You must apply for a sufficient sum if you want your loan application approved. A personal loan calculator will give you the exact amount you qualify for. It will calculate it based on your income, loans, and other circumstances.

The security of your current employment also plays a significant role. It helps determine whether the lender grants you a personal loan. Rejection for a loan is likely to occur if the borrower has a history of often changing jobs.


Several factors decide who is eligible for a personal loan. Thus, it is important to remember all the information provided above. Increasing the odds of your personal loan approval at a lower interest rate is also important. Banks also look at how long the applicant has been a customer.

A loan is more likely to be granted if you have a solid history with your bank and a sizable savings account. If you want your bank to be more accommodating the next time you seek a loan, you should repay yours on time once you get it.

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