Why Was Your Moneylender Loan Rejected?
Global financial systems are experiencing difficult times, the result of the macroeconomic conditions that have prevailed for the last two years since the outbreak of Covid-19. Some Singaporeans have turned to money lender loans for their needs, which are often urgent.
So if you got your moneylender loan rejected, whether for a mortgage or personal loan, it can be disappointing.
A money lender loan often has a short tenure and a high interest rate. Hence, obtaining a loan from a money lender is not cheap. But many apply for such loans out of sheer necessity.
Personal loans are processed based on your employment and income status. But if you got your moneylender loan rejected, the reason may not always be clear.
We’ll look at some of these reasons and what you can do to improve your chances.
Reasons Why Your Loan Application Was Rejected
A creditor will always protect its interests, regardless of the type of loan a debtor wants. to
Hence, it is unsurprising that financial institutions in Singapore, notably banks, do risk evaluations on every individual who contacts them for personal loans.
So if you got your moneylender loan rejected by a bank or licensed money lender, it could be because of one of these reasons.
Bad Credit History
Loan officers at Singapore banks will evaluate your credit history to determine if you can make future payments.
Collections, legal action, and garnishments will leave a negative impression on loan officers, as will bankruptcies and foreclosures. As a result, obtaining a personal loan in Singapore with bad credit can be quite challenging, even with a licensed money lender.
Poor Credit History
The second reason a money lender would reject you is your credit score or rating. During the loan approval procedure, Singapore banks will consider your credit rating.
A credit score indicates the state of your finances and the risk associated with lending you money. It represents the likelihood of debt repayment and the possibility of defaulting on payment obligations.
In Singapore, this number is then converted into a credit rating. The better your credit history, the higher your credit score (up to 2,000), and the higher the grade (AA rating). The lower your number, the worse you will seem in their records, making you a high-risk customer.
Lack Of A Clear Plan To Repay The Loan
The majority of loans are tied to pay, which might be problematic. Unstable employment can give the mistaken impression that you lack a stable income to repay your loans and risk losing your work.
Lenders appreciate applications with a straightforward, simple strategy that outlines a clear path to loan repayment. The likelihood of you obtaining a loan is zero if you don’t have an income and a repayment strategy.
You need sufficient documentation when applying for a personal loan. Licensed money lenders require you to meet them in person for a face-to-face verification at their office location after you apply online. This is mandatory by law.
So you need to ensure your information is submitted appropriately. A loan application can be rejected for even a slight discrepancy.
Previous Existing Debts
Your application for a personal loan may also be rejected if you have too many outstanding debts. Under such circumstances, no bank or licensed money lender will not approve your loan request since it believes you may become bankrupt.
A high debt-to-income ratio can make you look like a risky borrower. So if you want to get approved for a loan, pay off some of your debts first.
How To Avoid Being Rejected
Each time a loan application is rejected in Singapore, Credit Bureau Singapore (CBS) adds a notation to the applicant’s credit report.
Here are some tips to minimise the chances of having your moneylender loan rejected in Singapore:
- Make loan repayments on time and avoid loan default. If you cannot afford to repay a loan, you should not take one out.
- Avoid applying for many loans within a short period, as this demonstrates financial desperation and poor budgeting.
- Make sure you review your credit report regularly. Check for inconsistencies and ensure that all data is up to date.
- If you do not have a credit history to reasonably predict your repayment patterns, get quality testimonials that can fill that gap.
How To Improve Your Chances Of Getting Your Loan Approved
When applying for a loan, you must do everything possible to avoid rejection. Here are some ways to increase your loan’s approval odds.
- Ensure that your revenue meets the minimum criteria. Banks and licensed money lenders have varying income requirements for different types of loans. Look for a lender whose income requirements you can meet.
- If you’re uncertain about the eligibility requirements, consult the lender. Calculate your credit score to be on the safe side. To check your credit rating in Singapore, visit CBS and calculate your loan credit score.
- Apply for a loan that is relevant to your needs. Do not use a personal loan to fund extravagant activities that will not create sufficient revenue to repay the debt.
- Do not take loans beyond your ability. Only borrow what you can repay.
- As far as possible, do not default on payments, as your credit score will be affected.
- Check all the details in your loan application form to ensure that everything is in order.
Was your moneylender loan rejected but you need a personal loan urgently for an emergency?
Horison Credit prides itself as one of the best licensed money lenders in Singapore. We provide our customers with affordable interest rates and favourable terms depending on their financial needs.