PERSONAL LOAN COLLECTION: 6 KEY CRITERIA YOU MUST COME IN 2025 | Mint

If you apply for a personal loan or any other loan, you must meet the bank’s various criteria for suitability. The bank does the suitability control to evaluate whether you qualify for the personal loan. The broader suitability criteria are the same for most banks. However, within each suitability criteria, the bank can define its own minimum and maximum limits. For example, each bank can be its own minimum and maximum age group, minimum monthly income, etc. Decision. In this article we will understand the various criteria for suitability set by banks for a personal loan. Criteria for suitability for personal loan Some of the different criteria for suitability set by banks for personal loans include the following. Good credit rating A good credit rating is one of the most important suitability criteria for a personal loan. Most banks consider a credit rating of 750 or higher than good to be eligible for a personal loan. The higher the creditworthiness, the better. Some banks offer better loan conditions on high creditworthiness such as a lower interest rate, a higher loan amount, a longer term, etc. So, if you have a high credit rating, use it to negotiate with the bank for better personal loan conditions. Banks are considering a creditworthiness below 750 for the processing of a personal loan application. These applications can be approved from case to case. Some banks can charge a higher interest rate where the credit rating is lower. Some banks may ask the borrower to get a co-applicant or a sponsor. For example, the HDFC Bank website mentions that a Cibil score is above 720 ideal for personal loans. The Kotak Bank website mentions that a Cibil score of 750 or higher is generally considered good for approving a personal loan. Minimum monthly income banks look at the regular source of revenue of the borrower for processing a personal loan or any other loan application. The income is significantly important in a personal loan as it is an unsecured loan. The bank does not have collateral as a backup to recover the loan amount in the case of a default. Some banks specify the minimum monthly income requirement separately for salaries and independent individuals. For example, the ICICI Bank website mentions the minimum monthly revenue requirement of Rs. 30,000. It further adds that the minimum salary requirement will differ depending on the client’s profile (employer type, a relationship with ICICI bank, etc.). The Indusind Bank website calls a minimum net monthly income of Rs. 25,000 for salaries. For independent professionals, the minimum net annual income after tax Rs must be. 4.8 Lakhs. The Kotak Bank website calls the minimum monthly income requirement as follows: Rs. 25,000 per month for a Kotak Bank salary account holder Rs. 30,000 per month for a non-coting bank’s salary bill holder Rs. 20,000 per month for a Kotak bank employee -age within a particular bracket Most banks specify the minimum and maximum age for applicants at the time of the application for a personal loan. For example, the Axis Bank website mentions that the minimum age should be 21 years. The maximum is 60 years at the time of the expiration date of loans. For example, if you want to apply for a personal loan with a 2-year term, the applicant’s maximum age can be to 58 years and not above it. The IDFC First Bank website mentions that someone is between 21 and 60 years old for a personal loan. The ICICI Bank website calls the age requirement between 20 and 58 years. Stable career A stable career with a regular monthly income gives the bank confidence about the borrower’s repayment ability. Some banks specify the total years of work experience and the minimum term with the current employer. For example, the HDFC Bank website mentions a minimum of two years of work experience, with at least one year in the current organization. On the other hand, the Kotak Bank website mentions that the applicant should have at least one year work experience. Debt-to-income (DTI) ratio The debt and income ratio (DTI) measures the percentage of monthly income that refunds debt obligations. Banks consider a DTI ratio of 35% or lower for the processing of a personal loan application. The lower the DTI ratio, the better the banks it is. Some banks consider a DTI ratio of 36% to 49% from case by case. For such applications, the bank may ask the borrower to get a co-applicant or a sponsor. Some banks can lower the personal loan amount. Minimum educational qualification Some banks specify the minimum education qualification as one of the suitability criteria for personal loans. For example, the Kotak Bank website cites the minimum educational qualification as a graduation or diploma. However, the HDFC Bank, ICICI Bank, Indusind Bank, etc. Residential location Some banks and NBFCs have reached a limited geographical. They therefore give personal loans to individuals living in specific cities. Some banks require an individual to live in the current place for a particular term of office as a criterion for a personal loan. For example, the Indusind website mentions that an individual had to complete a minimum stay of one year in the current home, if rented. Check the various criteria for personal loans before applying if you do not meet the suitability criteria, your personal loan application will be rejected. If the bank has already conducted a credit investigation during the processing of your application, it will appear in your credit report. Too many loan rejections that appear in your credit report will not fall well with banks. They will consider it credit hungry behavior. Before applying for a personal loan, you must check the suitability criteria on the bank website to understand whether you comply. You have the option to talk to the banking representative by calling customer care or visiting the bank branch. If you know the suitability for personal loan and whether you fulfill it before applying the loan application, the process becomes smooth and effortless. Gopal Gidwani is a freelance writer for personal finance with 15+ years of experience. He can be reached at LinkedIn. First published: 14 Apr 2025, 10:58 am Ist