Taking a personal loan can be a long, complicated process, and it is important to get your research done before requesting one. Find below a few things you should keep in mind before applying for a personal loan are listed below: 

Credit score 

This score lies between 300-850, and it tells lenders about someone’s credit history, which comprises things like open accounts, payment history, pending loans, defaults, etc. This score is an important criterion for the borrower to get a personal loan. The higher the credit score, the better the borrower looks to potential lenders. This means that the chances of getting their loan sanctioned become better. 

Collateral

Many lenders require you to pledge valuable assets (also known as collateral) when taking a secured personal loan. If, for any reason, you are unable to pay as per the plan decided, the bank can take possession of the collateral and recover the balance of the loan. However, many personal loans are unsecured, which means that they may not require any collateral. 

Relevant documents/forms

Some documents required for your application are: 

• Loan application: To provide details on the nature of the loan, such as the amount required and the purpose of the loan, amongst others. 
• Identity proof: Any proof of identity that has been provided to you by the government.
• Proof of address: This might overlap with identity proof, and it includes proof of home or the lease agreement. 
• Employment proof: If you’re employed, lenders need this to verify your payback abilities. 

Always perform a comparison of personal loan rates of various financial institutions before you finalize. An infinitesimal interest advantage can help you save a lot of money in the long run.

Must Read: How to Get a Good Interest Rate On A Personal Loan?