What to do when a personal loan application is rejected?
Because of their easy and immediate availability, personal loans are preferred by numerous borrowers in Singapore. Personal loan application are quickly approved by banks and other lending institutions. Hence, people approach the best legal moneylenders in Singapore, such as Singa Credit.
However, there are instances where a personal loan application has been turned down for several reasons. Even if the borrower has been turned down by a lender, they might still be able to qualify for a personal loan. Sometimes, all a person needs to do is submit an application to a different supplier. They could also need to improve their credit and make some modifications to their budget in other situations.
Steps to follow after loan rejection
If a personal loan application in Singapore is denied, the applicant should take the suggested actions to boost their subsequent application. These steps will help them in finding a new lender as well.
1] Find the reason for the rejection
Many lenders will promptly explain to the borrower why their loan application was denied. To get an explanation from someone else, though, one might need to ask.
Here are a few typical justifications given by lenders for disapproving personal loan requests.
- Low credit score: Due to the minimum credit score requirements set by the majority of lenders, having a poor credit score can result in immediate rejection. Most personal loans require a credit score of at least 670 to be approved, which is what lenders deem to be good credit. But each lender has its specifications. However, other options might not require good credit history. For example, a person can get a credit card with a 0 credit score.
- Inadequate verifiable income: Even if they don’t publicize it, the majority of lenders have minimum income requirements. Typically, the borrower must earn a minimum of $24,000 annually before taxes. Self-employed borrowers frequently run into this issue, especially if their income fluctuates from month to month. They have a hard time demonstrating that they will have the necessary revenue to repay the debt. If a person receives monetary compensation, lenders may find it difficult to confirm their income.
- Low cash flow: Cash flow is the recurring money that is received after monthly debt payments and costs. The borrower frequently requires having at least $1,000 per month left over after costs. It might be challenging to persuade a lender that a self-employed person would regularly meet this demand if they have fluctuating revenue.
- High DTI: Lenders often consider the debt-to-income ratio, or DTI, in addition to the monthly income after expenses. DTI is the ratio of a person’s monthly income to their other normal monthly costs, including debt repayment. Most lenders will not approve a borrower for a loan if their DTI is higher than 43.
- Mistakes on the application: No matter how qualified a candidate is, errors in the application could cause it to be rejected. The lender won’t be able to confirm the borrower’s identity, for example, if someone unintentionally submits the erroneous Social Security number. Therefore, it’s crucial to carefully read an application before submitting one.
2] Review your finances like a lender
There are a few techniques to increase the likelihood of approval without affecting personal finances. One should verify their DTI, bank statements, credit report, and credit score. Any bad characteristics, such as spending patterns, cash flow, and high DTI, should be watched out for.
3] Make quick fixes that might increase the chance of approval
In some circumstances, a borrower may merely need to modify their loan application strategy to be accepted the following time. They can take the help of a co-borrower who has a good credit score and few personal debts, can secure their loan with collateral such as real estate, make a down payment of at least 20% or apply with a cosigner if unable to meet the credit requirements.
Issues related to Personal Loan Application Rejection –
Some of the reasons for rejection of a personal loan application are error on a credit report, incorrect or incomplete loan application, mismatching of the signature, utilization of funds, credit report errors, inaccurate details, residential stability, incomplete documents or information, not having a steady source of income, not eligible, frequent job changes, etc. One of the major reasons for getting a loan application rejected is having a low credit score. A credit score is basically a number between 300 and 900 that reflects a person’s creditworthiness. It plays a vital role in the lender’s decision to give out a loan. The lenders, while giving out a loan, check the borrower’s credit score, and if it is below the threshold, then the person will not get the loan. A credit score of 750 or above is considered ideal for loan approval. People can check their credit scores online, and Paisabazaar is a website that provides this service free of cost. Another major reason is an unstable source of income. The borrower’s stable income proves and gives assurance to the lenders that the borrower will be able to repay all the EMIs, monthly payments, and the charged rates of interest.
If you have been rejected for a personal loan, don’t despair. There are a few things you can do to try and improve your chances of being approved the next time you apply. First, make sure that you understand why your application was rejected. If it was due to your credit score, try to improve your credit rating by paying off any outstanding debts and making all of your future payments on time. If you were rejected because of your income, try to find a way to increase your earnings. This could involve taking on extra work, starting a side hustle, or finding a better-paying job. Finally, remember to shop around and compare different personal loan offers before you apply. This will help you find a lender who is more likely to approve your application.
Concluding, if you have been rejected for a personal loan, there are still options available to you. You can reapply with a cosigner, look into other types of loans, or improve your credit score. Whatever route you decide to take, make sure to do your research so that you can find the best possible option for your financial needs.
Licensed Moneylender in Bugis– Singa Credit Pte Ltd
Established in 1992 and previously known as Yong Seng Credit,
Singa Credit Pte Ltd is Licensed Moneylender in Bugis regularly updated with the latest regulations to be in line with the requirements set out by Registry of Moneylenders.
Please feel free to call 66946166 for more info on our lowest interest rate in Singapore or walk in our office 470 North Bridge Road #02-01 Bugis Cube Singapore 188735.