Is it true that banks and NBFCs have become more stringent with personal loan approvals after the pandemic?

That is true that after the pandemic, banks and NBFCs are focusing more on offering personal loans with stricter credit policies. In fact, banks are now targeting customers working with reputed companies and those with continuity in their stable jobs. People applying for a personal loan in 2021 are going to find it tougher for sure.

Customers who are under any COVID-related loan restructuring may find it difficult to get funding and they should have paid at least last 3 EMIs on existing loans and credit cards. Also, preference will be given to people receiving salary regularly and on time without any pay cuts. Even frequent job-hopping can be a negative for your score.

Experts have asked personal loan borrowers to focus on creating a good credit score. Normally, lenders check credit score for assessing applicant’s creditworthiness for availing a personal loan. Ensure that your score with CIBIL is above 750 for higher approval chances. Bankers suggest timely repayment of EMIs, limited credit utilization ratio etc.

Repayment and servicing capacity will be another key factor. Lenders will normally tend to prefer applicants whose loan repayment obligations including the proposed personal loan applied for in such a way that the EMI does not exceed 50% of the net take-home pay. We are not talking about the gross salary but the take-home pay.

One more warning is that people should avoid multiple applications and too many Aadhar checks as it can weight against the chances of getting a loan approval. Ideally, stick to the banks or NBFCs where you have existing relationships. Experts also suggest that those with good scores should bargain hard for lower rates and zero prepayment charges.