Every lender that provides personal loans will have an eligibility criterion for applicants. A personal loan is an unsecured loan. This means there is no collateral. This makes it all the more important for the lenders to have eligibility criteria for personal loans and check whether applicants meet it. Nowadays you can apply for a loan online itself. This digitization has attracted a lot of people to apply online for personal loans when in need of urgent funds.
One of the important personal loan eligibility criteria is the applicant’s repayment history. Your repayment history is a record of your past loan repayments. It is recorded in your credit report and also influences your credit score.
If you make timely payments, then the repayment history is positive. If you miss on paying even a single EMI, no matter how long ago that was, it still reflects in your credit report, thus affecting your credit score.
A credit score is what decides whether your loan will be approved or not. The credit score is also known as CIBIL score in India as the Credit Information Bureau of India Limited (CIBIL) has the records of all the loans and credit cards held by people.
If there is no default in your loan repayment history then it increases your chances for loan approval. But if you have defaulted on your loan repayments then your CIBIL score is affected and so are your chances of availing a loan in the future.
The loan repayment history shows how reliable an applicant you are. It also helps determine your creditworthiness. If you have defaulted on your payments, then you need to know if it is a minor default or a major one.
A minor default is when the payment is delayed or missed for less than 90 days. This affects your CIBIL score only temporarily.
A Major default is when payments which are delayed or missed for more than 90 days. If this happens then your account falls under the Non-performing asset category. This is a permanent blot on your credit report.
If as an applicant, you have minor defaults then you can revive your CIBIL score by doing timely payments.
Personal loans are now a go-to option for a lot of people. Online loan applications have made it easier for people to apply for personal loans and get immediate funds in their bank account. Also with features such as personal loan EMI calculator, it has become simple to manage and plan the loan applications. Yet an applicant should take into consideration his/her own payment history which involves past loan payments and as well as credit card payments.