One of the key indicators of any person’s credit profile is employment. Banks make credit profile of each person who contacts them for any kind of loan. It is an extremely essential part of all loan applications process and the banks consider it very gravely before sanctioning any type of loans. There are several factors that are considered for deciding on the eligibility for any loan such as the age of applicant, his monthly income, educational, other loans which he has to pay back, whether he lives as tenant or owns a residence, etc.; however, employment is the main priority over all the other things.
A regular employment, along with a good income at a reputed place such as a government job, jobs in alleged public sector undertakings, blue chip companies, well established MNC’s, as well as other private limited firms are on the banks priority list and thus get preferential treatment when deciding the loan’s eligibility.
Nature of Your Job
Nature of your job viz. permanent, contractual or temporary also gets high considerations while establishing loan’s eligibility. A person, who is placed comfortably and has permanent employment, more likely, is to qualify for the loan quickly and get better rate of interest and other things on his loan, in comparison to a person having a contractual or temporary employment. In fact, lots of banks have strict lending policies and don’t lend in any way to people without permanent jobs.
Salary from Current Employment
The salary amount one draws, can determine the repayment ability of the individual to a great extent. Banks usually grant personal loans of 10 times a person’s monthly salary. As a result, if an individual has his salary of Rs. 20,000 monthly, then bank will happily give him personal loan of 2 lakhs if he meets all other eligibility requirements. In contrast, a person having monthly salary of around Rs. 10,000 will really find it hard to get the personal loan of 2 lakhs.
Continuity in Present Employment
Continuity in present employment is another key factor which goes towards making any person eligible for a loan product. Banks opt for borrowers with a constant employment record, so they enforce criteria for the least number of years within the present employment as any clause in the eligibility requirements. An individual who has stuck somewhere with same organization for past 2 to 3 years will certainly get a fast loan sanction and better interest rate than any job hopper who changed 5 job in past 4 years.
Total Employment
If any individual has been hired for 5 or even more years without any chief break, banks observe him as an excellent prospect to lend out. The loan sanction in this case could be very prompt and the best rates of interests are reserved for the person if he’s working at any trusted and reputed source. Contractual workers don’t find favors with financial institutions and banks. In case, loan product in thought is secured loan such as a car loan, the banks do relent, if the contractual employees meet the income and all other eligibility requirements, as they have car as the security or collateral. In case of the unsecured loans such as high ticket loans and personal loans of long tenures such as home loans, banks certainly shy away from the ones having temporary or contractual jobs.
The secret to get a fast sanction lies in matching credit profile of loan product and bank perfectly. Income, age, employment requirements, education, residence, and all other eligibility requirements must be met totally and care must be taken that right documents requisite by the banks in order to establish the fact should be promptly presented.
How Can You Improve Your Credit Profile?
The very first thing to improve your credit profile is to find the eligibility criteria for a specific loan product. Now look through the details and mark things where you diverge from this particular profile. It can be employment, age, or income etc. Finding an apt co-applicant or guarantor who can complete the eligibility requirement totally will help you perk up your credit profile. If, for example, you’re salaried and over the age of 60, then chances are huge that to get the loan you’ll need to improve your own credit profile with suitable co-applicant or guarantee who is very well employed and will retire after the loan will be paid off entirely. Similarly, if minimum monthly income prerequisite for a loan tends to be Rs. 20,000 and borrower’s salary is just Rs. 15,000/ month, he can then club the incomes of his son or spouse and hence enhance his credit profile.
A first-rate credit profile which matches the eligibility prerequisite of a bank tends to be the key to get the best interest rate and other required terms on a specific loan product, and this should not be overlooked ever.
