Personal loan eligibility: 6 key criteria you must meet in 2025 | Mint

When you apply for a personal loan or any other loan, you must fulfil the bank’s various eligibility criteria. The bank performs the eligibility check to evaluate whether you qualify for the personal loan. The broader eligibility criteria are the same for most banks. However, within each eligibility criteria, the bank may define its own minimum and maximum limits. For example, each bank may decide its own minimum and maximum age bracket, minimum monthly income, etc. In this article, we will understand the various eligibility criteria set by banks for a personal loan.

Personal loan eligibility criteria

Some of the various eligibility criteria set by banks for personal loans include the following.

Good credit score

A good credit score is one of the most important eligibility criteria for a personal loan. Most banks consider a credit score of 750 or above good to be eligible for a personal loan. The higher the credit score, the better. Some banks offer better loan terms on a high credit score like a lower interest rate, a higher loan amount, a longer tenure, etc. So, if you have a high credit score, use it to negotiate with the bank for better personal loan terms.

Banks consider a credit score below 750 for processing a personal loan application. These applications may be approved on a case-to-case basis. Some banks may charge a higher interest rate where the credit score is lower. Some banks may ask the borrower to get a co-applicant or a guarantor.

For example, the HDFC Bank website mentions a CIBIL score above 720 is ideal for personal loans. The Kotak Bank website mentions a CIBIL score of 750 or above is generally considered good for approving a personal loan.

Minimum monthly income

Banks look at the borrower’s regular source of income for processing a personal loan or any other loan application. The income is significantly important in a personal loan as it is an unsecured loan. The bank doesn’t have collateral as a backup to recover the loan amount in the event of a default. Some banks specify the minimum monthly income requirement separately for salaried and self-employed individuals.

For example, the ICICI Bank website mentions the minimum monthly income requirement of Rs. 30,000. It further adds that the minimum salary requirement will differ depending on the customer’s profile (employer type, having a relationship with ICICI Bank, etc.). The IndusInd Bank website mentions a minimum net monthly income of Rs. 25,000 for salaried individuals. For self-employed professionals, the minimum net annual income post-tax must be Rs. 4.8 lakhs.

The Kotak Bank website mentions the minimum monthly income requirement as follows:

1. Rs. 25,000 per month for a Kotak Bank salary account holder
2. Rs. 30,000 per month for a non-Kotak Bank salary account holder
3. Rs. 20,000 per month for a Kotak Bank employee

Age within a specified bracket

Most banks specify the minimum and maximum age for applicants at the time of applying for a personal loan. For example, the Axis Bank website mentions the minimum age must be 21 years. The maximum is 60 years at the time of loan maturity. For example, if you want to apply for a personal loan with a 2-year tenure, the applicant’s maximum age can be up to 58 years and not above that.

The IDFC FIRST Bank website mentions anyone aged between 21 to 60 years can apply for a personal loan. The ICICI Bank website mentions the age requirement between 20 and 58 years.

Stable career

A stable career with a regular monthly income gives the bank confidence about the borrower’s repayment capability. Some banks specify the total years of work experience required and the minimum tenure with the current employer.

For example, the HDFC Bank website mentions a minimum of two years of total work experience, with at least one year in the current organisation. On the other hand, the Kotak Bank website mentions the applicant must possess at least one year of work experience.

Debt-to-income (DTI) ratio

The debt-to-income (DTI) ratio measures the percentage of monthly income going towards repaying debt obligations. Banks consider a DTI ratio of 35% or lower for processing a personal loan application. The lower the DTI ratio, the better banks consider it.

Some banks consider a DTI ratio of 36% to 49% on a case-to-case basis. For such applications, the bank may ask the borrower to get a co-applicant or a guarantor. Some banks may reduce the personal loan amount.

Minimum educational qualification

Some banks specify the minimum education qualification as one of the eligibility criteria for personal loans. For example, the Kotak Bank website mentions the minimum educational qualification as graduation or diploma. However, the websites of HDFC Bank, ICICI Bank, IndusInd Bank, etc., don’t specify any minimum educational qualification as an eligibility criterion for a personal loan.

Residential location

Some banks and NBFCs have a limited geographic reach. So, they give personal loans to individuals residing in specified cities. Some banks require an individual to reside at the current location for a specified tenure as an eligibility criterion for a personal loan.

For example, the IndusInd website mentions an individual should have completed a minimum one-year stay at the current residence, if rented.

Check the respective personal loan eligibility criteria before applying

If you don’t fulfil the eligibility criteria, your personal loan application will be rejected. If the bank has already made a credit enquiry while processing your application, it will appear in your credit report. Too many loan rejections showing up in your credit report will not go down well with banks. They will look at it as credit-hungry behaviour.

Hence, before applying for a personal loan, you must check the eligibility criteria on the bank website to understand whether you fulfil it. You have the option to talk to the bank representative by calling customer care or visiting the bank branch. Knowing the personal loan eligibility and whether you fulfil it before making the loan application makes the process smooth and hassle-free.

Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.