Personal Loan Application: How to Prevent Rejection
Any lender is always open for business but also constantly selective. One may like to extend credit to genuinely help, but lending is not charity. Finance companies are allergic to borrowers who are likely to become delinquent. While many legal money lenders in Singapore might be willing to issue loans to individuals with less than perfect credit, they would charge more interest to make up for greater risk.
Some people are more qualified to get a personal loan than others, but all applicants are subject to scrutiny. No matter how creditworthy you think you are, rejection is still a possibility. To avoid getting denied for credit when you need it most, do the following before you apply.
Learn About Minimum Requirements
First, understand the risk appetite of your prospective finance company. Learn about its minimum credit rating and income requirements, so you would know your chances of qualifying beforehand. If your credentials do not seem to be good enough for your desired loan, it is unwise to apply because of the odds.
Applying for too many loans over a short period is going to hurt your credit. It is imperative to be aware of your credit score early on to where you stand before walking into a lender’s office. Enquire to Credit Bureau Singapore to learn more about your creditworthiness.
Look at Your Debt-Service Coverage Ratio (DSCR)
Your DSCR tells creditors how many more debts on top of your current financial obligations you can manage with your income. The higher your DSCR is, the less capable payer you are in the eyes of lenders.
You have to be honest with the debts and expenses as well as the sources of income you will declare. A lender has sufficient resources to research your information and validate (or invalidate) your claims.
If you hold too many loans at the time of your application, a lender may reject you without even thinking twice. You have to eliminate some of your debts first to inspire some optimism among finance companies.
Be Specific With Your Purpose
A lender would want to know why you want the money in the first place. Some loans have few restrictions in terms of usability while others have plenty of limitations.
If you apply for one that can only be used for certain purposes, make sure intention for applying is legitimate and credible. Otherwise, your chances of approval would be slim.
Avoid Incorrect Details
Honest or not, a mistake can cost you a successful loan application. A lender always exercises due diligence to avoid fraudulent activities and weed disreputable borrowers out.
Ensure that all of the pieces of information that you put in your application are consistent with your supporting documents. This way, your prospective lender would not doubt your integrity as a borrower.
Use a Security
Include collateral into the mix to reduce the risk a lender has to take for loaning you money. Doing so may also help you access more funds.
However, you cannot just use any asset. Make sure your security is of high value. Ask your prospective lender about a secured loan’s requirements so that you can present a qualified asset as collateral.
Personal loans are a privilege enjoyed only by those truly qualified. Do everything right to put yourself in a good light, and obtain the money you need with little stress.