Know How A Co-applicant Can Increase Your Personal Loan Eligibility

Personal Loan Eligibility

Last Updated on March 12, 2024 by admin

To be able to get the approval from the lender, you need to fulfil the personal loan eligibility criteria for that, you need a good credit score, a stable income and minimum liability. When you have a low credit score and insufficient income, it can reduce your chances of getting the loan sanctioned. Therefore, the solution to this issue could be to make a joint application by roping in a co-applicant. But it is important to check the personal loan eligibility first before taking any step.

Can a co-applicant increase your chances of approving the personal loan by the lender? Before answering this, we need to know who can be a co-applicant, how a co-applicant help to get the approval for the personal loan? All the answers to the question are here.

Who is a co-applicant?

Financial institutions allow your spouse or your parents to be a personal loan co-applicant. Some lenders may allow your siblings to be a personal loan co-applicant, but you need to check whether your lender has such a provision in their policy. 

How does a co-applicant help to get the approval for the personal loan?

  • Joint Income: When you make a joint application with your spouse/parent/sibling as the co-applicant, the total of your and your co-applicants income is taken into consideration by the lender. Thereby, if your personal loan is getting rejected because of your low income, the revenue of your personal loan co-applicant fills the deficiency. If your co-applicant has a high income, it will make you eligible for a considerably high loan amount at better interest rates.
  • Addition of Credit Score: With assessing the joint income of both the borrowers, lenders take into consideration the credit score of the borrower and co-borrower as well to sanction the loan. If the co-borrower has a good credit score, then it makes your application strong, and also there are fewer chances of your application to get rejected. Applying through a joint application with a co-applicant is beneficial when the primary borrower has a low credit score, the excellent credit score of the co-borrower increases the eligibility of the application.
  • Co-applicant is a Family Member: As your co-applicant for the joint application is one of your family members, be it your spouse or parents or sibling; it is secure to have a co-borrower. When the personal loan co-borrower is a family member, there are fewer chances of conflicts incase the co-borrower fails to repay his part of the monthly instalment. Personal loan EMI calculator, as a tool, estimates the monthly instalments of both, the borrower and the co-borrower respectively.
  • Lower Debt to Income Ratio: Those applicants with high debt to income ratio tend to get their loan application rejected by the lenders. Debt to income ratio is the ratio of your monthly instalments to your monthly income. When applying through a joint application, the income of the co-applicant reduces the debt to income ratio. And makes the application lucrative to the lender.
  • Preferential Interest Rates: If your personal loan co-applicant is a high creditworthy borrower, then it might make you able to negotiate the rate of interest with the lender. This may help you to get the loan at better interest rates in comparison to the individual application.

Keep these important factors in mind while applying for a personal loan with a co-applicant.

  1. Defaulting on the loan re-payment affects the credit score of the co-applicant.
  2. If the primary applicant is not able to repay the loan, the responsibility of re-payment comes to the co-borrower.


As a co-borrower for a personal loan includes your family member(s), it’s a wise way to boost your loan eligibility because its a quite secure decision. It reduces chances of a conflict to a great extent in case your co-borrower fails to repay his/her part of the instalments. A co-borrower not only increases your personal loan eligibility but also allows you to avail a more considerable amount at lower rates.

Read More: A Complete Guide to Avail Personal Loan Online in India

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Sophia Anderson
Sophia Anderson is a finance writer and blogger with a passion for helping people improve their financial literacy. With over 5 years of experience in the finance industry, Sophia has worked with individuals, families, and small businesses to provide financial advice and guidance. Her expertise includes budgeting, saving, credit management, and debt reduction. Sophia is dedicated to breaking down complex financial concepts into easy-to-understand language and empowering her readers to make smart financial decisions. She is a frequent contributor to financial publications and has written extensively on topics such as personal finance, investing, and financial planning. Sophia's mission is to help people take control of their finances and achieve financial security and freedom. When she's not writing, Sophia enjoys hiking, practicing yoga, and reading personal finance books.