The availability of loans in Singapore doesn’t mean that money lenders will approve your request. Most money lenders use different eligibility checks to determine if you qualify for a loan.
So why was your moneylender loan rejected? Let’s find out the reasons and how you can avoid such a scenario.
When financial emergencies happen, the last thing you want to grapple with is where to find a loan.
But it could be more frustrating if a money lender rejects your loan request. Here are some reasons why a lender would turn down a loan application.
Most licensed money lenders in Singapore verify your credit history and do not approve loans if your credit score is about 1,000 or so.
Technically, credit scores refer to numbers (up to 2,000) based on a grading system, which equates to a rating (AA-HH).
Generally, credit scores that are close to 2,000 are good, while those near the 1,000 mark are poor and reduce the chances of loan approval.
However, you can consider a personal loan with bad credit in Singapore for emergency funding if your credit score is low.
Though an excellent credit score is ideal, you may struggle to keep a good report due to your credit history. After all, your financial status determines the ability to repay or default on loans.
Note that various aspects are considered when determining your creditworthiness.
You may also fail to secure a loan from a bank if your credit history is wanting. Failing to repay your debts on time or defaulting on loans is reflected on your credit history, and affects your rating.
Also, any credit-related activities such as the closure of accounts without clearing debts, leave a bad impression.
Bankruptcy, forceful loan collections, and legal actions made against you for defaulting on loans also impact your credit history and may result in loan rejection.
This is rather complex but may be a factor for rejection if you have never applied for a credit card.
This is because the lack of credit history, borrowing, and spending habits deny a lender the chance to assess your creditworthiness. As a result, it is likely to reject your loan request.
A stable and valid income is one of the most important requirements money lenders consider when assessing eligibility.
Traditional financial institutions such as banks will check your annual income to establish if it meets the minimum eligibility criterion. So will licensed money lenders.
For example, you may provide bank statements to prove that you have been earning income from a credible source.
Insufficient and unverifiable income is presumed to be risky, implying that you could struggle to repay the loan.
Lenders check specific requirements before approving or rejecting loan requests. For example, you must provide your NRIC and financial details to improve your eligibility.
A lack of the correct documents is likely to result in rejection. Also, you may make a mistake and provide incorrect information when filling up a loan application.
Inaccurate or inconsistent data may be why you don’t get loan approval.
Being employed for several months is something money lenders will verify. Changing jobs frequently is counter-effective because financial institutions will find you vulnerable to losing your job and income.
A lender wouldn’t think twice about rejecting a loan if you keep changing jobs or cannot validate your source of income.
Note that being self-employed doesn’t mean your loan request will be rejected.
Having many loans that you struggle to manage makes you a risky borrower. Money lenders will discredit your loan request if you have multiple debts from multiple lenders, as they may presume you are insolvent.
The risks associated with moneylending are reasons why licensed money lenders enforce loan criteria.
The requirements vary, but knowing what to work on increases your chances of loan approval. Here are a few things you can focus on to increase your loan approval chances.
Having debts with no plan on settling them is one reason loan requests are turned down. Restructuring and consolidating debts helps build your credit history and proves that you can manage loans responsibly.
Your credit history plays a vital role in loan eligibility – sort out your debts as required and avoid making late payments or defaulting on loans.
A positive credit score and history signifies the ability to manage finances and repay loans.
It pays to know how to check your credit score in Singapore and rebuild it.
Steady employment and income are minimum eligibility criteria when looking for loans. You might change jobs but try remaining in the same profession to avoid being denied a loan.
A recurring income flow proves that you can manage loans by making monthly installments.
You could be unsure of how to get a bank loan with bad credit in Singapore. Try the following tips:
As you can see, many reasons could be why a licensed money lender rejects your loan – but the above tips can help with loan approval.
Since loans incur interest, it will help if you knew beforehand how much it would cost to repay a loan. Use a personal loan calculator in Singapore to determine the loan rates.
Was your moneylender loan rejected?
When a financial crisis happens, seeking a loan from a trusted licensed money lender could be the best alternative, so it can be disheartening to get rejected for a loan.
At Katong Credit, we offer tailor-made financial solutions to meet your needs. You can contact us for personal loans or apply for a loan today.