Credit profile is a kind of report that proves the credit worthiness of an individual. On the basis of the income, education, residence, age, employment, nature of job and other parameters, a bank creates a profile of the loan applicant. This data helps the bank in determining the credit-worthiness of the loan borrower. The whole idea of this exercise is to judge whether the applicant is an eligible candidate for the loan in question. Whether, he will be able to repay the loan back with accrued interest on the borrowed loan amount in the stipulated time frame.If an applicant has a previous credit history, it becomes an important tool for the banks to judge the credit profile of an individual. A person, who has taken a loan earlier and has paid it back with regular payments, creates a positive impression and gains positive credit score. On the contrary, an individual with a poor credit score will form a negative image and may face so many hurdles in gaining the approval for their personal finance.Banks provide detailed eligibility conditions with every loan product. The closer a borrower matches these conditions; the better will be the interest rates and loan terms. Having a consistent employment in a blue chip company, MNC, public sector undertaking, government office or a reputed private company will get a borrower low interest rate loan. The further you deviate from these established norms the higher will be the personal loan interest rates.The amount of salary one draws, determines the repayment capacity of an individual to a large extent. Banks generally give a personal loan of 10 times the monthly salary. So, if a person has a monthly salary of Rs. 50,000 banks will happily provide a
of 5 lakhs provided he meets other eligibility requirements. On the other hand a person with a monthly salary of Rs. 25,000 will find it difficult to get a personal loan of 5 lakhs.
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