HOW TO GET AN UNSECURED PERSONAL LOAN NOW: Limit your credit utilisation ratio to 30%

financialexpress.com:

As banks and non-banking financial companies become stringent in disbursing unsecured personal loans and credit card receivables after the Reserve Bank of India (RBI) increased the risk weights on these loans, borrowers should now keep the credit utilisation ratio (CUR) below 30%, experts say. Till now, loans were disbursed even at a CUR of 50%.

The credit utilisation ratio (CUR) will be a pivotal factor for borrowers as lenders will now exercise greater caution. Lenders closely look at CUR — the ratio of total balance on credit cards and total credit limit — to assess the borrower’s unsecured debt. Applicants who demonstrate responsible credit management are likely to be favoured by lenders as it reduces the perceived risk of default.

Adhil Shetty, CEO, Bankbazaar.com, says a low CUR can ensure your credit score is not adversely impacted. “A higher CUR can lower your score marginally. Regardless of the CUR, timely payments are the top priority. But if you have a high CUR along with late payments, getting a new credit card becomes tougher,” he says.

The credit risk assessment, approval and pricing of loans vary across lenders. Individuals planning to avail personal loans should compare the interest rates of many lenders and approach the one with whom they maintain deposits and have taken loans or credit cards. To be sure, lenders often offer personal loans at preferential interest rates to their existing customers.

Borrowers should aim for a credit score of at least 750 crucial for determining the loan eligibility and the interest rate. And for additional security, borrowers may consider guarantors or some collateral. Individuals facing difficulties due to a lower credit score, should explore alternative options such as