Maintaining a steady credit rating while trying to get a personal loan can be challenging. The primary reason why your credit score goes down south is that of the increase in debt on your profile.

People usually find it difficult to draw a line between credit factors and credit rating. That is why they feel factors like marital status, age, and debit card play a role in loan eligibility criteria.

However, the truth is that credit ratings are a whole different concept altogether. Nonetheless, it still needs to be maintained no matter what, especially, if you want to keep enjoying commercial facilities like personal loans.

Here are five things that need to be kept in mind while applying for loans, so as to not damage your creditworthiness with lenders.

1. Lower DTI Ratio

DTI stands for “Debt To Income” and is a term commonly used in the banking sector. It refers to the percentage of your debt against the income. The lower the debt compared to the monthly income the more chances are of you qualifying for quick personal loan approval. In other words, maintaining a lower DTI ratio gives lenders an additional layer of security against repayment of the loan amount, which in turn works well for your credit rating.

2. Opt for Soft Quotes

Whenever you decide to shop for the perfect lender to acquire low-interest rate personal loans make sure that you opt for soft quotes first. By doing so, you will be able to avoid unnecessary hard background checks which can affect your credit rating drastically. Another reason for receiving soft quotes is that every financing organization has different Personal Loan eligibility criteria. It means that if you apply to them formally and get rejected because of their selection standard, then it might cause harm to your credit background.

3. Say no to multiple applications

One of the most significant crimes that you can conduct while trying to get a personal loan is sending out multiple applications at the same time. By indulging in such activities, it suggests that you are not confident about securing a loan which might be a cause for the rejection of your application. Instead, you should try using personal loan features like eligibility calculators to make sure that your application has a chance at approval. Such calculators are usually available on the website itself.

4. Checking credit scores

Whether you need a personal loan at the moment or not you should always keep a regular check on CIBIL score. It will allow you to spot any fluctuations that might occur suddenly. Also, monitoring your credit score regularly will give you a chance to improve your profile in advance, in case, you decide to apply for a loan anytime soon. The usual factors that can affect your credit score are your payment history, the amount of debt, as well as the extent of new credit accounts that you have created.

5. Read terms and conditions

Most lenders write down the personal loan benefits that they offer in bold print. Whereas, the critical information is generally placed in a corner somewhere. Such details shine a light on subjects like additional charges, maintenance fee as well as penalties that might increase your overall EMI amount. It can be another reason why your credit rating is compromised due to the excess burden. That is why it is suggested that you read all the terms and conditions carefully before applying for a personal loan.

Read Also: 6 Best Uses of Personal Loans you Should Know

Also check out pre-approved offers by NBFCs on personal loans, home loans, business loans and more. This saves your time and you can get going with your busy life without having to waste hours on time-consuming verifications.

Author's Bio: 

Hi, I am Arwind Sharma. Currently residing in Gurugram, Haryana. I work as a financial advisor with a Fintech company and have an experience of more than 7 years in personal finance. Having worked with some of the topmost financial firms in India I developed a knack for writing and sharing my knowledge to help others. If you need help or suggestions regarding matters related to finance and investment, you can connect with me on social networking platforms.