I’m planning to apply for a personal loan soon, but I’m not sure what exactly determines if I’ll be approved or not. How do banks or NBFCs actually calculate personal loan eligibility in India? Is it just based on credit score, or do they look at income, job type, and existing EMIs too?
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Here’s how most banks and NBFCs evaluate your eligibility:
Credit Score (CIBIL/Experian) – This is the first thing they check. A score of 750+ is considered healthy. It tells the lender how reliably you’ve handled debt in the past.
Monthly Income – Your income determines how much you can borrow. Salaried individuals in metro cities usually need to earn at least ₹25K–₹30K/month. For self-employed individuals, lenders typically ask for ITRs and business income proof.
Existing EMIs/Obligations – If you’re already repaying other loans or credit cards, that affects your debt-to-income (DTI) ratio. Lenders prefer that your total EMIs don’t exceed 40–50% of your take-home pay.
Employment Type & Stability – Working with a reputed private company, MNC, or government/PSU helps. Most lenders look for at least 6 months to 2 years of job stability. For self-employed borrowers, they assess business stability (usually 2–3 years in operation).
Age & Location – Most lenders offer loans to individuals between 21 to 60 years also, your location can affect eligibility—urban applicants often get more favorable terms due to lower perceived risk.