Last Updated on Sep 5, 2023 by Harshit Singh

You might find yourself in need of loans for various purposes, and there are several financial institutions ready to assist you. However, each lender has specific loan eligibility criteria, which can determine your chances of your loan approval. These factors play a crucial role in determining your credibility as a borrower, affecting the trust they place in you when lending their money.

In this tech-driven world, you can conveniently assess your loan eligibility through various online loan eligibility calculators. These tools are designed to assess your loan application by identifying your credibility, and by passing through, can increase your likelihood of obtaining a loan.

Let’s delve deeper into these factors and explore steps you can take to enhance your chances of securing a loan.

Factors affecting loan eligibility

The following indicators are mainly responsible for determining your loan eligibility:

1. Income level and stability

Your income indicates your cash inflows, which eventually help you pay off your loans. Most lending institutions have a minimum requirement of Rs. 15,000 per month as income for salaried individuals who wish to take out a loan. However, this limit varies from financial institutions. If you are self-employed, the minimum income is set at Rs. 5 lakh per annum for certain banks. In general, the higher your income, higher is the probability of you paying back your loan on time, which the bank greatly appreciates. Thus, this increases your chances of getting a loan.

2. Reputation of employer

Apart from how much you earn, another factor that may affect your credibility is the reputation of the organisation where you work. Banks and other lending institutions prefer extending loans to those employed with reputed MNCs or government organisations. These ensure job security and a stable income. For instance, many lenders have the criteria that loan seekers must have at least two years of work experience to make them eligible for a personal loan.

3. Housing situation

Having your own house has its perks and improves your chances of attaining a loan. For a higher sum loan, banks usually ask for an asset as a collateral, in this case, a house can be such a collateral. On the contrary, individuals living in a rented accommodation adds the pressure of monthly rent payments, which may take up a large chunk of their income. From the perspective of banks, this reduces the amount you can spare towards loan repayments, making lenders skeptical of extending the loan.

4. Age

Lenders lean towards those in the age bracket of 21-60 yrs while deciding to give out a loan. For most banks and other financial institutions, the maximum age till which you may avail a loan is 60 yrs. However, there are separate schemes available for pensioners that usually extend to those who are within 75 yrs of age.

5. Credit score and history

Your credit score is a numerical rating issued by credit rating agencies. In India, the most common credit score used is the one given by CIBIL. The CIBIL score ranges from 300 to 900. Most banks and NBFCs look for a credit score of at least 750 while extending a loan. However, you may avail a loan with a lower credit score as well, but at higher interest rates. Your credit history determines your score. To improve your rating, focus on timely repayments of all loans and not taking up more loans than you can handle.

With the factors mentioned above, banks evaluate your loan eligibility and take a decision. If you’re lacking in any criteria, there are ways to improve your chances of getting a loan.

How to use loan eligibility calculators?

There are plenty of loan calculators available online. All major banks and other financial institutions offer this facility, with particular rules in place. Depending on which financial institution you wish to avail the loan, you can visit their website that has the designated loan eligibility calculator.

Select the kind of loan you wish to apply for and enter your relevant details. These include your employment information, monthly income or turnover (in the case of business owners), and your housing status. Moreover, personal details such as name, address, and date of birth are also asked. 

Note: It is important to put correct information as banks usually back checks the information and if found at fault, banks have the right to reject application. 

Once you have filled up all the fields, you may be required to enter your phone number to receive an OTP. This ensures that your privacy is maintained and only you can get the information. After completing all formalities, press ‘Enter’ to get a detailed report of your loan eligibility.


Various factors affect your eligibility as a borrower. However, once you have in mind all the things that go behind deciding how trustworthy you are from a lender’s perspective, you can work to improve your chances. For example, if you have a bad credit score, you can apply for a loan of a smaller sum and pay back the amount in time to increase your credit score. 

There are innumerable lending institutions, such as banks and NBFCs, that provide this service. All you have to do is find the right bank with exciting interest rates and repayment policy.

Ayushi Mishra
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