What does a person do when in an unforeseen financial need like a medical emergency or some repair work or a last-minute travel plan? Naturally, one starts looking at borrowing options available to him/her. Traditional methods of borrowing like banks may not be a reliable option in times of emergencies because the credit score of the person may not allow the bank to grant him/her a loan. The credit score calculated by banks in order to decide the eligibility of a borrower is based on previous credit history. It may seem unfair to judge a person’s creditworthiness in this manner.
Personal loan apps like CASHe are a welcome change in the Indian lending sector where the creditworthiness of an individual is judged on a fair basis called the “Social Loan Quotient”.
What is SLQ
CASHe’s proprietary credit evaluation framework, the Social Loan Quotient (SLQ), uses a combination of big data analytics and proprietary artificial intelligence based algorithms to evaluate traditional inputs and the user’s digital footprint to measure their creditworthiness.
What Does SLQ Determine
The SLQ determines both the loan amount and the interest rate charged. In simpler terms, parameters like number of Facebook friends, public interactions on social media, the apps one has downloaded on his/her phone and the mobile phone model that one uses, education, remuneration, career, financial history, etc. will be used to determine the eligibility of a borrower. By using these parameters, one is able to determine the overall picture of an individual’s creditworthiness.
Advantage of SLQ
The whole process of generating the scores through SLQ is quite simple and takes just a few seconds. With a better Social Loan Quotient, the loan’s rate of interest could be lower, and loan eligibility could be higher. Many personal loan apps are emerging in India these days which offer short-term loans which are payable over a period of some days to a few months. The best part of borrowing from personal loan apps is the hassle-free and paperless experience which saves a lot of time in comparison to borrowing money from conventional sources.
Also Read : How To Build Credit History From Scratch
Factors Influencing SLQ
Social Media: Your presence on social media plays a role in your SLQ. This includes how many friends or followers you have and how you interact with them.
Phone and Apps: The type of smartphone you use and the apps you have installed can impact your SLQ. Using a modern smartphone with important apps shows that you are up-to-date with technology.
Education and Job: Your educational qualifications and current job status are also important factors. So, a higher education and a stable job can certainly help improve your SLQ.
Income and Spending: Regular income and sensible spending habits suggest that you are financially stable, which can increase your SLQ and make you more attractive to lenders.
Financial Behavior: How you handle your overall finances, such as paying bills on time and avoiding debt, plays a big part in your Social Loan Quotient.
Also Read : How Having Multiple Credit Cards Can Affect Your Credit Score
Comparison with Credit Score
The Social Loan Quotient (SLQ) and a traditional credit score serve the same purpose as they both measure how likely you are to repay a loan. However, they differ in how they gather information. While a credit score mainly looks at your past borrowing and repayment history, SLQ also considers your online presence, job status, education, and other modern data points. This makes SLQ more inclusive, especially for people who might not have a long credit history.
Tips to Improve SLQ
- Make sure to be active on social media and engage positively with friends and followers
- Keep your social profiles updated and professional
- Pay your bills on time and show responsibility by managing your finances well
- Ensure your phone is up-to-date with useful apps
- Have a steady and stable income as it boosts your SLQ
Conclusion
This is all about what SLQ is, the Social Loan Quotient, and the advantages of SLQ. As it is a new method to assess creditworthiness, it is gaining popularity to make borrowing easier and more accessible for everyone.
Curious about your Social Loan Quotient? Take a moment to check it today. Knowing your SLQ can give you insights into your financial health and help you understand how likely you are to get a loan.
