Availing a personal loan can be of great help in fulfilling your financial goals. However, since a personal loan is an unsecured loan, banks and other financial institutions have standard eligibility criteria for applicants of personal loans. One of the significant personal loan eligibility criteria is the applicant’s repayment history. The repayment history of the borrowers is recorded through their credit report. Therefore, if you are planning to avail a personal loan, make sure that you have a positive repayment history. Below, we are going to discuss the importance of a positive repayment history and how it can affect your personal loan eligibility.
By making timely EMIs payments, you can successfully create positive repayment history. If you miss on paying even a single EMI, no matter how long ago that was, it would still reflect in your credit report, thus affecting your credit score.
A credit score, commonly known as the CIBIL score, decides whether your loan will be approved or not. If there is no default in your loan repayment history, it would boost your credit score, thereby increasing your chances for loan approval. On the contrary, if you happen to default on your loan repayments then your credit score would take a blow, which in turn, would hamper your chances of availing a personal loan in the future. The loan repayment history gives a clear idea about your creditworthiness to the financial institutions. In addition to that, it also enables the loan providers to determine how reliable an applicant you are.
If you happen to default on your payments, you should know if it is a minor default or a major one.
Minor Default
When the payment is delayed for less than 90 days, it is known as a minor default, a minor default affects your CIBIL score only temporarily. If you have minor defaults, it is possible for you to revive your CIBIL score by making timely payments.
Major Default
When payments are delayed for more than 90 days, it is called a major default. In case of a major default, your account falls under the non-performing asset category. A major default is a permanent blot on your credit report.
Nowadays, with banks and other Non-Banking Financial Institutions, it is possible to apply for a personal loan online in a hassle-free manner. This has made it easier for people to apply for personal loans and get immediate funds in their bank account. In addition to that, features such as personal loan EMI calculator enable the borrower to calculate their EMIs and loan tenure wisely.
Additionally, comparing various loan providers and their deals will help you to find the best personal loan for yourself. Nowadays, with leading financial institutions, you can also customize your loan to best suit your needs. Lastly, do not forget to read the terms and conditions of your personal loan before availing it. This will help you avoid any inconvenience in the later stage.
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