Is Credit Score the Only Criteria While Taking Loans

Credit score, a three-digit number provided by any of the four credit information companies in India, plays a crucial while taking loans. But it is not the only criteria which lenders take into consideration. Here are a few things besides a credit score that the lenders consider before they hand you that loan:

Age

Younger people are considered to be abler to repay a loan. The logic being that they have more time and energy to earn money and are more probable to repay the loan. Generally, banks prefer salaried employees between the age group of 21 to 60 years. The age criteria shift by 4 years for self-employed people ranging from 25 to 65 years.

Employment Stability

Your job stability holds a substantial weight with the lenders. Your career gaps not only bother the next company you are eyeing, but also the money lenders. Frequent job switches also indicate unstable behavior. For salaried people, they should be employed for more than 2 years in the current role and for business people, they should be running a business for at least 5 years. This, however, is quite subjective and is dependent on other conjoined factors like the organization you are working at, your annual CTC, the growth factor of your profile and so on.

Credit Score:

Credit score or credit report holds an important stance in getting you a loan at lower interest rates. Maintaining a good credit score increases the chances of getting loan with added multiple negotiating options those are related to tenure, loan amount, EMI (Equated Monthly Instalment) and interest rates. If in case your lender(s) finds you at risk with a default payment history, huge outstanding loan, or fraudulent track record, thereafter lenders have every right to cancel your loan application or might charge higher interest rates to lower their risk.

Past and Present Financial Situation

Finance digs into your past, but thank God it is only limited to monetary matters. Your financial history is very well considered by the lenders to build your personality. Details such as your payment patterns, defaults, and irregularity if any, is considered by the lenders to gauge the risk they are investing in. Obviously then, if you were a serial (payment) offender, your chances of landing yourself a loan are unfortunately bleak. Not otherwise though! Lenders also consider your current financial status and quite ironically, you are more likely to get a loan if your financial status is already good.

Existing EMIs

In case you are already paying your EMIs while you look for another loan then you are inviting more difficulties. But if you really need a loan, then you need to prove that you are earning a decent income and are left with an adequate amount of money even after paying all your EMIs and other expenses. If you are juggling well, then the banks won’t mind handing you the money!