Applying for a big personal loan can feel daunting. Banks and fintech lenders are willing to disburse large sums today, but they don’t hand them out easily. They want to see not just your income, but also how responsibly you handle money. The good news? With some planning, you can improve your chances of approval and even get better terms.
Build a strong financial profile
Lenders start with the basics: your credit score, income, and job stability. A score above 720 is usually the entry point; cross 750 and you’re in the safe zone. Salaried applicants should ideally have at least a year of continuous employment, while self-employed borrowers are expected to show two to three years of stable business history.
Income matters too. In metros, banks often look for ₹25,000 a month or more, while in smaller cities the threshold can be closer to ₹15,000. Younger borrowers may qualify for bigger loans simply because they have longer earning years ahead.
Keep an eye on FOIR
Most people stop at “credit score,” but lenders check another number closely: your Fixed Obligation to Income Ratio (FOIR). FOIR measures how much of your monthly income is already tied up in EMIs and other fixed commitments.
Ankit Mehra, CEO of GyanDhan, puts it simply: “While CIBIL score matters, your FOIR is equally crucial. An FOIR below 40% shows lenders you can manage repayments, improving your chances of bigger loans and favourable terms.”
In simple terms: if you earn ₹60,000 and already pay ₹30,000 in EMIs, your FOIR is 50%. That’s high. Clear a smaller loan, or consolidate debts, and you may suddenly become eligible for a larger personal loan.
Show financial discipline
Numbers aside, lenders want to see habits that suggest you’ll repay on time. Some simple steps:
- Always keep your FOIR under 40% by limiting new debt.
- Set up auto-debit for EMIs so there’s no risk of missing payments.
- Keep your credit score healthy by paying bills on time and avoiding defaults.
- Maintain a digital trail, salary credited to your account, regular tax filings, and clear documentation. This reduces back-and-forth with lenders.
Salaried applicants should ideally show at least a year of stable employment. Self-employed applicants fare better when they have three years of consistent income records and proper tax filings.
Use digital lending to your advantage
Banks and fintechs have made loan processing much faster through digital infrastructure. With e-KYC, instant income verification, and background checks, many large personal loans get approved in hours rather than weeks. But here’s the catch: these systems rely on clean, accurate data. Submitting incomplete or inconsistent paperwork is the quickest way to delay or derail approval.
A word of caution
Qualifying for a large personal loan is one thing; stretching your finances to take it is another. A higher sanction doesn’t mean you must borrow to the limit. Personal loans come with higher interest rates than secured loans, so borrowing more than you need can strain your future cash flow.
Bottom line
Lenders today look at the whole picture: your credit score, FOIR, employment record, and repayment discipline. Tidy up each of these areas, and you won’t just improve your odds of approval; you’ll also increase your chances of getting the amount you want at competitive terms.
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Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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