There comes a time in anyone’s life when we need quick cash for emergencies or other purposes like home renovation or to pay for a child’s education. This is where personal loans come in. A personal loan is an unsecured credit option that you can use during an emergency or for some unforeseen expenses. The terms of the loan will largely depend on your CIBIL score and your creditworthiness. Suppose you wish to avail yourself of a loan without documents. In that case, your credit history is vital information that the credit institution will use to decide whether you are eligible for a personal loan or not.

How does it work?

While the term ‘no documents’ is used, most banks or financial institutions will require minimal documents such as proof of address and identity. These institutions will focus on your personal habits to determine your ability to repay the loan, along with other factors that may establish your credibility. This information will assist lenders in approving a personal loan with minimum documents.

Related: 9 Tips To Help You Get Your Personal Loans Approved

What Habits Do Financial Lenders Look For

When applying for a personal loan without documents, the following are just some of the more important financial habits lenders will look for:

No Missed Payments

If you had missed some payments when they were due, it sends a message that you are not the type of person capable of managing your finances diligently. If this is the case, securing a personal loan without documents will be very difficult, if not impossible, as you will be considered a risk.

A Clean Record of Loan Repayment

It is vital to uphold a clean credit history if you want to avail yourself of any type of loan in the future, especially a personal loan without documents proving your creditworthiness. If you have repaid your existing loans on time and have not missed any EMI payments, it will stand you in good stead. This type of history will show that your credit history is sound. For example, if you use a credit card, you must be able to show that you have always paid your dues on time and have repaid the total amount outstanding on the loan.

A High Credit Score

Maintaining a high credit score is a sure way to build trust with lenders to be a reliable customer. A credit score is a numeric representation of the creditworthiness of a borrower. To apply for an instant cash loans without any documents, you should have a credit score of about 750 or more.

A CIBIL score can be obtained from TransUnion CIBIL, a credit information firm that monitors and tracks the history of all loan repayments of financial customers in India. Your CIBIL score is used by NBFCs and banks to ascertain the creditworthiness of financial consumers. Your CIBIL score will range from 300 – 900 and is an indication of how likely you can repay a loan on time.

You can apply for the CIBIL score online or offline by mailing the required documents to Mumbai’s CIBIL offices. Knowing your CIBIL score will save you a lot of time and effort if it should be on the low side as your chances of securing a personal loan without documents will be minimal.

A Good Relationship with Your Lender

Having a good relationship with a lender will go a long way towards helping you secure a personal loan without supplying the necessary documents customarily required. Depending on how good your relationship is with your lender, you may even be granted a loan at a lower interest rate along with preferential terms and conditions reserved for their trusted customers.

Keep Your Debt-to-Income Ratio Low

If you have a low debt-to-income ratio, it is a good indication that you have a high repayment capacity. A debt-to-income ratio below 50% is ideal as it will help you secure a no-documentation loan.

Suppose you pay attention to the above 5 ways to ensure you are eligible for a loan without providing the normal required documents. In that case, you can proceed with applying for a loan from your preferred financial institution. Ordinarily, financial institutions do not consider providing home loans without proof of income and documentation. Unsecured loans are usually based purely on a good relationship with your bank or on customer persona. If you have a financial history of timely payments and a clear credit record, your bank may offer you an unsecured personal loan based on the information they already have available without producing any further documents. An unsecured loan means no collateral will be required from you. Repayments are flexible but are usually required to be settled within a short span from 1 – 5 years. Repayment options will be decided by the lender and will depend on your credit history.

Repayments usually are done monthly via EMI or debited through your bank by ECS (Electronic Clearing Services).

Further Reading: Get A Personal Loan Without Documents

Certain banks may allow an instant personal loan without providing any documents such as proof of address or proof of the income supplied your office or residence address is updated in your bank account, to be taken out up to Rs30 lakh in 48 hours. With virtually everything to do with finance being done online, a personal loan without documents is a dream for most borrowers. It eliminates the time-consuming process from application to approval.

If you do not have access to regular income proof such as a salary slip or IT returns, you can still apply for a personal loan by providing an alternative source to prove that you will be capable of repaying the loan. Some ways include:

• Submitting a Form 16
• Any other source of income, for example, from rentals, business endeavors, or a spouse’s income.
• The submission of collateral
• Current or savings accounts with the bank or financial transactions in the past with timely repayments
• Get a guarantor on board to submit his/her proof of income to guarantee payment if there is a default.

If you have an excellent relationship with your bank, they may consider you a pre-approved customer. They will not require you to submit any additional documents when you apply for an instant personal loan.