Why Your Personal Loan Got Rejected
Given a choice, most people would prefer to not take a loan and pay off whatever they need using cash. However, there could be times where you need some extra cashflow to tide you over a tight period. With the array of personal loans offered by banks, you might have went ahead to apply for one of those fast loans and to your dismay, you got rejected. Why?
Well, there can be many reasons but many people may not know that the Credit Bureau Singapore(CBS) keeps a record of your credit history from your records with financial institutions and retail banks. CBS aggregates credit-related information amongst participating members and presents a complete risk profile of a customer to credit providers. This helps credit providers such as banks to determine the likelihood of the customer repaying, thus enhancing their risk assessment capabilities.
Why Would My Personal Loan Application Be Rejected?
Bad credit history
Lending criteria is largely based on your credit history so if you have had a few negative listings on your file, you’re likely to have your loan rejected. You might not think much about this, but late payment for credit cards can contribute to this. If you currently hold existing loans such as auto loans or mortgage loans, it might affect your loan approval as well.
Lenders want to be sure that you have a stable job so that you can repay the borrowed amount. Someone who has a history of switching jobs or a string or part time job may rank low on their credit rating. Additionally, if your income is deemed insufficient by the bank to sustain your monthly loan repayments, your application could be rejected as well.
Insufficient Info on your credit file
This is somewhat of a catch-22 situation. You might be out of school for two years and have never applied for a credit card or any form of loan before. This means that there’s little info about your credit history in your credit report. If you’re having trouble getting a personal loan and you don’t have a lot of experience with using credit, you can try applying for a credit card first to build up some good credit score. Just remember to pay your bills promptly!
How To Improve My Chances Of Loan Approval?
- Check the minimum income requirements – You should check what the bank requires in terms of credit rating for their lending requirements. Most banks require a minimum annual income of $20,000 to qualify for a personal loan. Ensure you have no outstanding loans – Do not apply for a loan while you have outstanding credit card payments. This can affect whether the bank decides to grant you the loan.
- Purchase your credit report – you can purchase your credit report from the CBS or subscribe to view your credit file online. This could highlight certain “blacklists’ you might have missed and give you an idea of what might have caused a rejection of your loan application.
- Apply to a different bank – different financial institutions have different lending criteria. The rejection of one may not mean you will be rejected by another. If you see that your credit hostory is pretty clean, try out at another bank.
So if. you’re looking for the best personal loan, with the lowest rates, then be sure to check out our loan comparison tool.