The financial turmoil that the coronavirus pandemic has thrown into the Indian economy is one of the worst crises of modern times. Factories are closed, offices are shut, modes of transportation are stopped, virtually the whole country has come to a standstill. Employers have either slashed the salaries of employees by up to 50% or have sent them on unpaid leaves. While it is being hoped that the countrywide lockdown will be lifted by the first week of May, it will take a few weeks if not months for the economic activities to resume.
Importance of being pre-approved for a personal loan
Your salary might be delayed due to fund crunch being faced by your employer because of the lockdown. The situation can be worse if you have to look for a new job as it might take some time. Even if you cut your expenses to a bare minimum, you will still need a significant amount of money to maintain your family. You need an alternate source of funding until the situation returns to pre-COVID-19 times. This is where the utility of a Personal Loan comes to the fore. If you have been pre-approved for Personal Loan by your lender, you will be able to avail the required credit facility as and when required.
Financial institutions always keep track of the credit behavior and repayment track of their customers. Based on these factors and the length of relationship with the institution, customers are offered pre-approved Personal Loans. The lender assesses your profile and approves you for a specified loan amount. In order to avail that loan amount, you just need to complete a few basic steps on the website or mobile app or through phone banking. No other checks or processes will be carried out by the lender at the time of disbursal, thereby allowing you access to the money readily.
Financial habits that help you become eligible for a Personal Loan
The lenders always respect good financial behavior. You can incorporate certain financial habits in your daily routine, and your bank will mark you in the list of preferred customers. Here are the financial habits that will always help you become eligible for a Personal Loan:
- Keeping a tab on credit score regularly: The importance of a good credit score is known to everyone. But what most people tend to ignore is checking their credit report regularly. You must know that credit reports are prepared through software and therefore are prone to certain errors. If you do not check your credit report regularly, these inadvertent errors will reduce your credit score, thereby creating problems in you being eligible for a Personal Loan. It is also pertinent to mention that after you have raised a dispute, it takes several weeks or months for any errors in the credit report to be rectified. Therefore, you should make it a point to check your credit report regularly for any errors and raise the dispute as and when you find any. Otherwise, your pre-approval can be withdrawn by the lender, and then the Personal Loan application might also get delayed.
- Pay your EMIs on time: If you have any active loan accounts, you must make it a point to pay your EMIs on time. In case of EMIs, you already have the repayment schedule with you wherein the date of EMI debit is specified. Ensure that sufficient balance is maintained in the account at least three days prior to the due date. Any instances of EMI bounce reflects poorly on your credit management skills.
- Auto-debit for your Credit Card bills: In case of Credit Card bills, you must try and repay the entire outstanding amount before the due date. If not possible, then pay as much amount as you can; opt for the minimum amount due only if you really do not have any other option. You can set-up an auto-debit for the minimum amount due against your Credit Card bill to avoid any chances of late payment. Later on, you can pay an additional amount towards the Credit Card dues as and when possible during the billing cycle.
- Maintain adequate balance in your bank account: One of the measures of the creditworthiness of a customer for banks is the balance maintained in the account. This directly reflects your liquidity. So, make sure you maintain a significant balance in your bank account and ensure it fulfils the minimum balance specified by the bank. Moreover, instead of keeping cash at home, keep it in your bank account and earn interest income on it. This will come in handy when you are in need of a Personal Loan or any other credit facility from the bank.
- Use your Credit Card judiciously: Credit Card debt is one of the most expensive forms of loan. If you do not settle your Credit Card dues in full every month, you end up paying an interest cost up to 48% per annum. So, use your Credit Cards judiciously and make sure that you do not max out your limit at any point in time. Maintain a healthy credit utilization ratio of up to 30%, to enjoy pre-approved Personal Loans or quick approvals for loan applications. Moreover, do not withdraw cash from your Credit Card not only because the cost associated is exorbitant, but it also reflects poorly on your financial management skills.
- Do not take multiple loans simultaneously: Taking multiple loans simultaneously indicates a dependency on credit, something which is a red flag for the lenders. Instead of taking multiple small loans, you should apply for a single loan of a substantial amount. Managing multiple Personal Loans is extremely difficult, and you might end up missing an EMI payment. This will not only lead you to pay significant late payment charges but also reduce your credit score. Make it a point of applying for a loan with a lender whose eligibility criteria you can meet, instead of blindly applying with multiple lenders.
Good financial behavior is highly sought after by lenders as it reduces the risk of default significantly. So, follow the tips mentioned above, and it will become easier for you to avail of a Personal Loan on the rainy days.
Also Read: Stuck in a Lockdown? Get a Personal Loan and be Ready for Financial Emergency!
To apply online for Home Loan, Personal Loan, Credit Card, Business Loan & LAP visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 7 million+ happy customers since 1989.