Personal Loan Eligibility in India: The Criteria Lenders Actually Apply

The five tests every lender runs

These are market norms, not one lender’s rulebook; thresholds genuinely differ between a PSU bank, a private bank and an NBFC, which is why a decline at one lender is not a verdict. Estimate your capacity precisely with the eligibility calculator.

Salaried vs self-employed: how the bar shifts

For salaried applicants, the file is simple: three months of payslips, six months of bank statements showing the salary credit, and Form 16. The employer’s category quietly drives both approval and price; most lenders maintain internal lists where government, PSU, defence and large listed companies rank highest, and small unlisted firms or cash-component salaries rank lower. Switching jobs just before applying hurts, not because ambition is suspect, but because most lenders want 6 to 12 months with the current employer.

For self-employed applicants, the burden moves to proving stable income: typically 2 to 3 years of ITRs with computation, audited or CA-certified financials where turnover warrants, 12 months of bank statements, and proof of business existence such as GST registration or Udyam. Lenders average or discount volatile income, so a spectacular last year helps less than three steady ones. Many self-employed borrowers get better pricing on a secured product; if that is you, compare a business loan or gold loan before paying the unsecured premium.

The credit score bands, honestly

750 and above: approvals are fast and the advertised rate grid is genuinely available. 700 to 749: most lenders approve, with a rate premium of one to three points; a strong employer offsets much of it. 650 to 699: the marginal zone where banks get selective and NBFCs price for risk; expect more documents and smaller sanctions. Below 650: mainstream declines are the norm, and the offers that remain are expensive enough that fixing the score first is nearly always the better investment. No history at all (NH or a -1 report) is its own category: some lenders decline on principle, while others accept new-to-credit salaried applicants at moderate rates, especially where your salary account lives.

Scores move faster than people expect: clearing overdue amounts, dropping card utilisation below 30%, and six months of flawless payments typically lift a mid-600s score into the 700s. What does not help is closing your oldest card or making multiple loan applications in a month, each of which trims the score further.

Common rejection reasons and the fix for each

FOIR breach: existing EMIs eat the capacity

Close or prepay a small EMI before applying, or extend the proposed tenure so the new EMI fits. A ₹3,000 EMI freed is roughly ₹1 lakh of five-year loan capacity regained.

Score events: a settlement, write-off or recent 30+ day overdue

These outweigh the score number. Clear the dues, obtain a No Objection Certificate, have the bureau record corrected, and reapply after six clean months.

Too many recent enquiries

Serial applications read as distress. Pause for 90 days, then apply once, to the lender most likely to approve you, ideally where your salary account is.

Unverifiable income: cash salary or thin banking

Route income through a bank account for six months, or offer a secured alternative where collateral substitutes for payslips.

Employer or profile outside policy

Each lender keeps negative lists: certain industries, very small firms, specific PIN codes. A decline on policy says nothing about you; a different lender category, bank versus NBFC, often approves the identical file.

A rejection is not recorded as such on your bureau, but the enquiry is. Fix the specific reason before reapplying rather than carpet-bombing applications. When you are ready, keep the document checklist handy and check the rate you should expect for your band.

Eligibility criteria: frequently asked questions