Why Was Your Moneylender Loan Rejected?
Personal loans are granted based on your employment and income status. A personal loan may appear viable if you need to cover unforeseeable expenses or pay off credit.
But what if you got your moneylender loan rejected by a licensed money lender or bank? How are you going to meet your immediate needs?
Licensed money lenders may be more lenient than banks, but they will require you to provide proof that you can repay your entire loan. If you can produce such proof, you can be sure your credit application will be approved.
Note that even minor errors in your financial records or loan application can result in your loan request being denied. Every time your loan application is turned down in Singapore, it is recorded on your credit report with Credit Bureau Singapore (CBS).
So don’t worry if you got your moneylender loan rejected.
In this article, we will look at why loan applications are rejected and what you can do to improve your chances of getting your loans approved. We’ll also tell you how to get a bank loan in Singapore with bad credit.
Reasons Why Your Loan Application Was Rejected
A Poor Credit Rating
A low credit score may be one of the primary factors in a moneylender loan application being rejected. This is because it suggests a person is more likely to miss payments.
Most banks and financial institutions in Singapore use credit scores, which are expressed numerically and converted into a credit grade.
You stand a better chance of being approved for a loan if you have a credit score of at least 2,000 and an AA rating.
Low Or Inconsistent Income
Despite how obvious it may seem, your income determines whether you can repay what you borrow. The minimum salary requirements differ depending on the financial institution and your legal standing.
Another consideration is how you make your money. Someone with a consistent income makes the best borrower. As a result, self-employed individuals, business owners, freelancers, and commission-based employees face more significant challenges in demonstrating their financial stability.
They will most likely need to provide additional documentation that attests to their income history to get their loan applications approved. Unfortunately, you will experience difficulty if you do not satisfy the minimum salary requirements or if your earnings are irregular.
Inadequate Credit Information
Lack of sufficient credit information is another reason why you got your moneylender loan rejected. A lack of credit information could imply that you have no credit history or that it is too recent for a loan application evaluation to be valid.
Insufficient Work Experience
Banks hope to find a borrower with a consistent employment history, as well as a borrower with a stable income. This entails sticking to the same employer for an extended period.
The ideal length of time varies depending on the lender. Most lenders, however, want to see that you have completed a new job’s probationary period and have, at minimum, three months of payslips.
How To Avoid Being Rejected And Improve Your Chances Of Getting Your Loan Approved
If this is your first time applying for a loan or you previously tried but failed, the process can be frustrating, especially if you need funds immediately.
Here are a few pointers to help you improve your chances of having a loan application approved.
Verify The Conditions For Eligibility
Whether you are applying for a loan with a licensed money lender or bank, always check the loan eligibility requirements before applying to avoid rejection. If you meet all the requirements, you can be more confident that you have a better chance of having your loan approved.
Maintain A Good Credit History
When your credit score increases, your chances of being approved for a personal loan in Singapore are higher.
Remember that your credit history is a significant factor in determining whether you’re a low-risk or high-risk client. Late and defaulted payments are two indicators that are almost certainly harmful.
Keeping a clean credit record demonstrates your ability to control your finances and gives you more confidence to continue doing so.
Prepare The Relevant Loan Application Documents
It is certainly beneficial to ensure that you have all the required documents prepped before applying for a personal loan. This may include documents such as:
- Proof of income
- Recent income tax return
- A Notice of Assessment
- Last 12 months’ CPF contributions
- Proof of address such as utility bills
- Proof of identity such as an NRIC, Employment Pass, or a passport
Submit The Necessary Paperwork
You must fill up an application form to apply for a personal loan. Ensure you provide current and correct information to avoid problems or delays with your application.
Analyse Your Capacity For Repayment
Examining your ability to repay a loan is also crucial before applying for one. This entails carefully looking at your finances to determine whether you can keep up with the monthly repayments.
Don’t Borrow More Than You Can Afford
If you have several loans, you might think about consolidating them. This will help you pay off your current loans to move to the next one. Avoid payment defaults to preserve your credit rating.
How To Get A Bank Loan With Bad Credit In Singapore
Your ability to obtain a personal loan with bad credit in Singapore will be hampered if your credit isn’t in the best shape. Here are some ways to improve the odds.
Ensure You Are Eligible
The eligibility requirements differ with banks, but most licensed money lenders only give loans to those between the ages of 20 and 55. If you apply to a bank, you must demonstrate that you make at least $20,000 for Singaporeans, and $40,000 for expats annually.
Make A Smaller Loan Application
You might be unable to obtain a sizeable personal loan from a bank if you have poor credit. Try applying for a lower personal loan amount to establish credit.
If this loan is approved for you, make sure you make all your payments on time and in full. The goal is to show that you can adhere to a set repayment schedule. As a result, lending institutions will have more confidence in your ability to repay a loan in future.
Avoid Mass Application
To avoid giving financial institutions the wrong impression, you shouldn’t apply for several loans within a short time frame. They may assume you are in severe financial trouble and immediately require a loan.
Financial emergencies may also suggest a higher risk of loan default.
Even if you see a great loan promotion, you shouldn’t apply for it unless you truly require it. Repeatedly applying for credit indicates to the credit bureau that you are credit-hungry, which can harm your credit score.
Here’s what you can do instead:
- Only submit a second loan application if a lender turned down your initial application.
- Apply for loans over a period of several months.
- Before submitting your application, do some research to increase your chances of being accepted.
How To Check Your Credit Score In Singapore
You must obtain a credit report from Credit Bureau Singapore (CBS) to verify your credit score.
You can request a soft copy online or a hard copy from SingPost outlets or the CBS office. It costs $6.42 (including GST), plus $2.00 for each additional delivery mode.
For an extra administrative fee of $17.12, you can pick up your report in only two hours at any SingPost outlet.
You are eligible for a free credit report if you have recently applied for a new line of credit with any CBS member.
It’s Possible To get Your Loan Application Approved
If you got your moneylender loan rejected, it’s discouraging to say the least. But it shouldn’t prevent you from trying again.
Remember that your loan request may have been denied for a variety of reasons. Money lenders might not explain why they are reluctant to extend you a loan.
On the other hand, your loan request may be approved but you may get charged exorbitant interest rates and harsh repayment terms. So you need to choose the right lender.
If you’re looking for a loan, use the BST Credit personal loan calculator to get a more accurate quote on your loan request.
We are a reputable licensed money lender in Singapore, offering some of the most affordable interest rates and no hidden fees.
Check out our loan calculator to get a list of interest rates, loan packages, and repayment plans based on the information you enter. You can adjust the loan tenure and loan amount to find a monthly repayment amount that you are comfortable with.