Last Updated on December 10, 2023 by Ali Hamza
Amongst the multiple well-known benefits of the popular credit option of personal loan, primary ones are quick disbursal, zero restriction on end-usage of loan money, minimum level of documentation, and the nature of being collateral-free (no security required). All this makes them one of the most preferred borrowing options in the banking industry, more so for those in quick need of urgent funds.
So, it becomes imperative for prospective applicants to tick off this 5 point checklist when applying for a personal loan to boost approval chances without harming your financial health:
Always do credit score review- The credit score of the applicant undoubtedly plays an unmatchable role in the loan approval as well as to even fetch a better rate of interest coupled with good service terms. Having a high credit score makes you possess higher chances of personal loan approval. That happens because these good credit profiled applicants are viewed to be credit disciplined thanks to their credit history of loan and credit card repayments, and they are thus deemed to pose a lower credit risk to lenders and are less likely to default. Moreover, some lenders like ICICI Bank personal loan even tend to offer preferential interest rates to applicants having a high credit score. But note that, on the flip side, those having a low credit score may either have their loan application rejected or have it approved at a higher interest rate.
Not only this, you should keep in mind that the credit score is calculated on the basis of information fed in your credit report by lenders and credit card issuers. So, the presence of any form of clerical error or, even worse, a fraudulent transaction in your credit report can certainly drag down your credit score and hence personal loan approval chances too. Therefore, ensure to review your credit report at periodical intervals to timely identify & report such information to the credit bureaus & lenders for rectification at the earliest. Your rectified credit report will automatically report a higher credit score. Also, making the wise move of checking ICICI Personal Loan Application status after submission helps to stay updated on your application status instead of anxiously and blankly waiting for the approval and rejection communication from the bank.
Act wisely when deciding loan repayment tenure –More often than not, a lot of lenders tend to assess the applicant’s repayment capacity while evaluating their personal loan applications. They generally require the applicant’s monthly EMIs, including the new EMI, to remain within around 50% of monthly income. This is where choosing the right tenure becomes crucial when taking ICICI Bank personal loan. Going for long tenure lowers the EMI amount, thereby reducing EMI to income ratio and ensuring it remains within the required range. Possessing a higher ratio than this can result in slighter chances of application approval. Hence, it’s often advisable to go for a long repayment tenure for the benefits of both EMI affordability as well as higher loan approval chances due to enhanced repayment capacity with smaller EMIs. Remember to prepay your personal loan whenever you have surplus funds, as this would help reduce the overall interest cost.
Additionally, always remember to check your EMI affordability through online EMI calculator tools when applying for a personal loan and even check ICICI Personal Loan Application status as well post applying for it. Never ever go ahead with ignoring your existing monthly contributions towards crucial life goals when zeroing in on your personal loan repayment tenure. When choosing an aggressive repayment involving a short repayment tenure of like 2-3 years to reduce your total interest cost on ICICI Bank personal loan, note that such a step should not be a result of compromising on contributions (investments like SIPs, RDs) towards other financial goals like child’s higher education and marriage, retirement planning etc. This is because this misstep may force you to take costlier (higher interest) loans to adequately deal with unforeseen exigencies and/or achieve those set vital life goals.
Compare amongst as many lenders possible for the best deal- Not one or two, but multiple lenders have been offering a wide range of personal loans to numerous target borrowers. Thus, their interest rates, including those of ICICI Bank personal loan, range and vary widely as per the applicant’s credit profile, income, credit score, age, location etc. It thus becomes imperative to compare the personal loan offers available from as many lenders as possible before zeroing in on any. When comparing, begin your search by contacting your existing bank or NBFC with whom you have a customer relationship. Go through their personal loan features and rates offered to you for being an existing customer, post which you can compare their offer with other lenders and accordingly finalize the lender who matches your eligibility as well as financial requirement in the best suitable way, according to your credit profile and repayment capacity.
Never submit multiple loan applications in a short duration
Your credit report is fetched by the concerned lender from the credit bureaus whenever you submit a personal loanapplication. This helps the lender to evaluate the applicant’s creditworthiness and past credit repayment behaviour, and history. These lender initiated requests for credit reports are called hard enquiries by credit bureaus, which get listed in the applicant’s credit report and hence, pull down credit score by some points.
Such inquiries can, as a consequence, harm an applicant’s credit score by some points, especially if multiple such requests are submitted in a short period. This may even result in the application’s rejection, as such instances depict the applicant as a credit hungry borrower. Thus, it’s wise to avoid submitting multiple loan applications to lenders and instead compare various lenders and submit applications to the most suitable one as per your financial requirement and eligibility. Also, ensure to check ICICI Personal Loan Application status from time to time to know whether your application is being processed or if not, then at least you know the reason why it got rejected or halted.
Never do over-borrowing-
A lot of applicants end up committing this massive mistake of borrowing more than the required amount as soon as they get to know their higher loan eligibility. Whenever you are getting tempted to avail a higher loan amount than what’s the actual requirement, it becomes vital to keep in mind that availing of a loan, especially a relatively higher cost one like a personal loan, involves interest cost which needs to be repaid along with the principal amount borrowed. So, the higher amount you choose to borrow, the higher your total interest cost would be. What’s more, if the over-borrowed amount, later on, becomes difficult to repay as EMIs, it can end up pushing you towards a debt trap, hence spiking up the risk of loan default. Thus, it is always advisable to borrow only the required amount as a loan, which can be both affordable and comfortable to pay as EMIs. After submitting an application for the required loan amount, always remember to check ICICI Personal Loan Application status to be aware of the status of your application and whether you would be able to avail the required funds.