<div align="justify">When Joe heard that his colleague Arun is looking for personal loans, he recommended an online lender who offered him personal loan at quite a competitive rate. The process was seamless and quick, and Joe was happily recommending that lender to all and sundry.<div align="justify"><br />Two days later, Arun walked up to Joe’s cabin, all annoyed. When asked, he said that the lender levied 17% interest rate. Joe was surprised. When they made further inquiries, they came to know it all came down to credit score and past credit behaviour.</div><div align="justify"><br />Easy access and flexibility. These are the primary traits that entice cash-crunched individuals to personal loans. It can be used for debt consolidation, home improvement, meet unexpected expenses like wedding or hospital expenses and many others. You do not even have to confide in or convince the bank about why you need the loan. Unlike other loans (auto loan, home loan etc.), the money is directly credited in your savings account. But people often forget that it’s not free bucks and should be treated as such. Hence, review the situation, explore more options and then decide. Even if you finally opt for personal finance, you must not do anything that can impact your credit score negatively.</div><div align="justify"> <br />Below are three personal loan mistakes one must never commit</div><div align="justify"><br />Apply too many times at too many places</div><div align="justify"><br />Just because it is easy and can be done in minutes, do not mean that you should click away online loan applications. Every inquiry you make and ever acceptance/rejection are recorded in the lender’s database and are sent to credit bureaus, who determine your credit score and hence credit worthiness. First shortlist a couple of lenders and check your eligibility using the EMI and eligibility calculator featured on their websites. Apply only if you pass the criteria or it will be rejected anyway. Each rejected application will cause your CIBIL Score to dip further.</div><div align="justify"><br />Disregarding credit score</div><div align="justify"><br />If you have decided to take out a personal loan, do take the effort to get your credit report. You can request one report a year for free. CIBIL Score (between 300 & 900) is assigned on the basis of your credit behavior. Banks and NBFCs disregard most applications with CIBIL Score below 740, though some new-age Fintech lenders are willing to relax up to 600. However, your credit score can make or break you when it comes to unsecured loans because many lenders follow a risk-based approval process, meaning the lesser your score is, higher the interest rate would be.</div><div align="justify"><br />Misrepresented or contradictory documentation AKA Lying:</div><div align="justify"><br />It is plain illegal to lie about your income to get a loan. Period. A salaried applicant might have some constraints regarding this, whereas a self-employed applicant doesn’t. Lenders have a large team of highly qualified analysts, operations executives and loan managers, not to mention latest software to verify and process an application. What makes you think that you can hoodwink all of them? At one stage or the other, you are bound to get caught. Sometimes, it could be unintentional too. Be that as it may, they can deny you loan if they find that the info provided are untrue or inaccurate. Credit bureaus usually mark this as ‘loan default’ and all your future loan requests would be rejected based on this. <br /><br />(The writer is Founder and CEO of Qbera.com)</div></div>
<div align="justify">When Joe heard that his colleague Arun is looking for personal loans, he recommended an online lender who offered him personal loan at quite a competitive rate. The process was seamless and quick, and Joe was happily recommending that lender to all and sundry.<div align="justify"><br />Two days later, Arun walked up to Joe’s cabin, all annoyed. When asked, he said that the lender levied 17% interest rate. Joe was surprised. When they made further inquiries, they came to know it all came down to credit score and past credit behaviour.</div><div align="justify"><br />Easy access and flexibility. These are the primary traits that entice cash-crunched individuals to personal loans. It can be used for debt consolidation, home improvement, meet unexpected expenses like wedding or hospital expenses and many others. You do not even have to confide in or convince the bank about why you need the loan. Unlike other loans (auto loan, home loan etc.), the money is directly credited in your savings account. But people often forget that it’s not free bucks and should be treated as such. Hence, review the situation, explore more options and then decide. Even if you finally opt for personal finance, you must not do anything that can impact your credit score negatively.</div><div align="justify"> <br />Below are three personal loan mistakes one must never commit</div><div align="justify"><br />Apply too many times at too many places</div><div align="justify"><br />Just because it is easy and can be done in minutes, do not mean that you should click away online loan applications. Every inquiry you make and ever acceptance/rejection are recorded in the lender’s database and are sent to credit bureaus, who determine your credit score and hence credit worthiness. First shortlist a couple of lenders and check your eligibility using the EMI and eligibility calculator featured on their websites. Apply only if you pass the criteria or it will be rejected anyway. Each rejected application will cause your CIBIL Score to dip further.</div><div align="justify"><br />Disregarding credit score</div><div align="justify"><br />If you have decided to take out a personal loan, do take the effort to get your credit report. You can request one report a year for free. CIBIL Score (between 300 & 900) is assigned on the basis of your credit behavior. Banks and NBFCs disregard most applications with CIBIL Score below 740, though some new-age Fintech lenders are willing to relax up to 600. However, your credit score can make or break you when it comes to unsecured loans because many lenders follow a risk-based approval process, meaning the lesser your score is, higher the interest rate would be.</div><div align="justify"><br />Misrepresented or contradictory documentation AKA Lying:</div><div align="justify"><br />It is plain illegal to lie about your income to get a loan. Period. A salaried applicant might have some constraints regarding this, whereas a self-employed applicant doesn’t. Lenders have a large team of highly qualified analysts, operations executives and loan managers, not to mention latest software to verify and process an application. What makes you think that you can hoodwink all of them? At one stage or the other, you are bound to get caught. Sometimes, it could be unintentional too. Be that as it may, they can deny you loan if they find that the info provided are untrue or inaccurate. Credit bureaus usually mark this as ‘loan default’ and all your future loan requests would be rejected based on this. <br /><br />(The writer is Founder and CEO of Qbera.com)</div></div>
