If you’re in the market for a loan, lenders consider you CIBIL Score. So count your income as a part of it. Your pay might not directly affect your loan decision but, it’ll impact your ability to get approved. Lenders consider various factors to approve a loan including Income & credit score, but these are different pieces of a puzzle.
This is what lenders see in your income & credit score
CIBIL Score / Credit Scores predict your loan repayment ability & your loan history. Most of the lenders completely don’t rely on the credit report, they validate your profile & financial history by themselves.
They look for:
- Outstanding debts.
- Unpaid loans.
- Past bankruptcy
- Loans foreclosed
- Recent loan applications or any major changes in your financial information.
However, one or more blemishes may not be deal breakers, but they still can affect your interest rate. If you draw higher income, a lender is less likely to see you as a defaulter. On a flip side, a higher pay may not favor you, if your fixed monthly expenses are high. Lenders want to know your debt to income ratio to verify your ability to pay. This is calculated by comparing your monthly income to all your existing debts and potential payments. In general the ratio looks commendable when it’s less than 28% to 31%.
If we see it in a lenders’ perspective, the lesser the principal amount, the lower the risk. If you make a higher down payment, the lender may get generous with the interest rates, which in turn benefits you. Likewise, with a low credit score, paying a sizable down payment, might get your loan approved.
Liquid assets aid you by bringing the rates lower. Lender considers you less risky, if you own assets – government bonds, stocks, deposits, or anything that can be liquidized to cover your loan amount.
Income stability is a vital factor to get your loan approved. Your current employment is sufficient to get a nod, but lenders look at your past 24 months work history to determine income stability. Recent unemployment or a spotty job is a red flag and will certainly affect your interest rates.
What can you do to get your cash loan approved?
You can improve your chances of approval by adapting good credit behaviors. Learn how to improve your credit score. Start consolidating your debts, as this always helps in boosting financial health.
FlexSalary provides short-term line of credit loans to consolidate your debt. Our instant cash loans are flexible and come with a lifetime validity. All you need to do is to provide your basic details, employment history & verify e-KYC, once approved you can withdraw any amount within your credit limit anywhere. Keep using it by repaying the loan balance. It’s a revolving debt & allows you to choose flexible repayment tenure. Moreover, interest is charged only on the amount used & not on the total sum.