Impact Of Job Change On Personal Loan Eligibility

Changing jobs is an important step in an individual’s career. As with every job switch one either gets a good hike, a promotion or in some cases both. However, a switch is always accompanied by an increase in take-home pay. It can help impact an individual’s credit score, savings, and emergency funds and might even open the gate to new credit options.

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However, the impact may not always be positive. Especially, if someone is planning to get a personal loan. If you got a hike with the switch, your eligibility to get the personal loan sanctioned increases. However, a pay cut while switching can also impact credit score negatively if an individual fails to pay EMIs and credit card dues.

Additionally, in the case of a notice period, when the person’s salary is put on hold as a common practice, it is quite possible that one may not be able to access their payslip for the months that they are serving their notice period. However, this is only permanent and can impact your eligibility for a short period till you get the next pay slip.

A person who has made switches frequently can also witness a decline in their credit score. 

Thus, impacting their eligibility for a personal loan. If someone has an urgent need for a personal loan, it is important to consider these factors when they are switching jobs.

Understanding these dynamics and timing your application strategically can help you secure a personal loan without hurdles.

Key Employment-related Factors Lenders Notice in the Applicant

Employment Stability: Lending companies and banks prefer borrowers who have had a steady employment history. Someone who has been changing jobs frequently may fall under the radar for all the wrong reasons when applying for jobs.

Employment History: Someone who has been working for a long period indicates financial reliability. While, someone who has had only a short stint at multiple organisations can make lenders a little suspicious, raising questions about one’s capability to repay loans and interest on time.

Steady Income: Consistent income is important for debt repayment. Lenders look for someone who has had a regular source of income to meet the monthly payment obligations.

Type of Employment: Applicants working with known/listed organisations or government institutions are usually looked at as lower-risk borrowers in comparison to someone freelancing, contractual workers, or gig workers.

Top Ways Job Switch Can Impact Your Loan Approval

Here’s how a job switch can impact an individual chances of getting loan approval:

Income Verification Issues: As one of the major documents required for the approval of regular income. Changing jobs may become a hurdle in procuring salary slips thus delaying your income verification.

Probation Period: Several lenders are apprehensive to approve loans for borrowers who are still under probation in their new jobs. Lenders prefer borrowers who have been associated with a company for at least 6-12 months.

How To Increase Chances of Personal Loan Approval During a Job Switch

Here’s how an individual can improve their loan approval chances after switching jobs by following these steps:

1: Record Your Income Proof: Ensure that you downloaded all your last salary slips before you lost access to your previous company’s portal. You can even share your offer letter and appointment letter.

2: Maintain High Credit Score: A credit score generally over 750 opens the gates for instant loan approvals.

3: Maintaining a Low Debt-To-Income Ratio: Lenders choose applicants who have lower financial liability and financial obligations.