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Why Was Your Moneylender Loan Rejected?

Why Was Your Moneylender Loan Rejected?  

It’s frustrating to have your moneylender loan rejected, especially if you need funds for an emergency. However, there are ways to get your loan approved.

Your loan application could be rejected by a money lender for many reasons. It could be because of your bad credit history, unstable income, amount of existing debt, etc. The fact is that a money lender will decline your loan when it deems there is considerable risk if it were to approve your loan.

Find out what licensed money lenders look for before they grant loans so you can improve your chances of loan approval.

4 Reasons Why Your Loan Application Was Rejected

All licensed money lenders have guidelines that direct them on when to offer loans. Fortunately, most of them try to take each borrower’s case into consideration.

Many factors come into play when money lenders review your loan application. But here are four common reasons why your moneylender loan was rejected.

1. Bad Credit Score And Poor Credit History

When you get a loan, your lender reports your repayment trends to the credit bureau. The bureau gives information on active or closed accounts, as well as your financial dealings.

This makes it tough to get a personal loan with bad credit in Singapore.

For example, a credit card issuer will report your credit card payments the day after your card’s monthly billing cycle ends.

Credit Bureau Singapore (CBS) collects such information and aggregates it on a 12-month rolling basis to generate your overall credit risk profile. Using that, any money lender can run a check on your creditworthiness.

Late payments, maxed-out credit cards, defaults in monthly payments, and bankruptcy will lead to a bad credit score. As a result, a money lender will most likely reject your application.

Lenders will evaluate your repayment capacity using credit scores from a low of 1,000 to a high of 2,000 that are rated a risk grade of HH (worst) and AA (best), respectively.

These scores and ratings are derived from a statistical analysis of your credit report. The higher your score, the better.

If your credit score is near 1,000, you’re considered a riskier borrower and likely to default in payment. If your score is near 2,000, you have a low risk of default.

Banks place great importance on a borrower’s credit score. Fortunately, licensed money lenders usually take a less detailed look at your credit history.

Unlike banks, licensed money lenders will instead look at your monthly income and other outstanding financial obligations.

So if you’re wondering “how do I check my credit score in Singapore?”, you can pay $6.42 (inclusive of GST) to obtain a credit report from CBS.

2. Low Annual Income

Financial institutions consider low-income individuals as likely loan defaulters. Your income is a crucial consideration for lenders when it comes to unsecured loans, which require no collateral.

No lender will take the risk as your income may not be adequate to service your monthly installments.

Every lender has a minimum income requirement for its loan products. For example, most banks require an annual income of $30,000 for Singapore citizens, while foreigners need to earn at least $60,000 per annum for personal loans.

How much can licensed money lenders loan?

Singaporeans and permanent residents who earn less than $10,000 annually are eligible for a loan of up to $3,000. However, foreigners earning the same income can only get a $500 loan.

Citizenship status does not affect loan eligibility for those earning between $10,000 and $20,000 annually – they are still eligible for a maximum loan of $3,000. Those with an annual income higher than $20,000 can borrow up to six times their monthly salary, regardless of citizenship status.

In short, if you want your loan to be approved, you need a steady and stable income.

3. Inadequate Credit Information

This could mean that you have no or little credit history , which is used to assess your loan repayment capability.

This mostly happens when you have not applied for a loan for a long time – hence, there is nothing on your records to show.

With insufficient information, it becomes hard for lenders, especially for banks, to offer you a loan.

4. Too Many Debts

Your licensed money lender may request to know about your transaction data. This will show incoming or outgoing payments and other account features such as overdraft payments, fees, etc.

Too many unpaid existing debts will affect your credit score. Your Total Debt Servicing Ratio (TDSR), or the percentage of your income that you spend on debt repayment, must not be more than 55% of your monthly income.

How To Avoid Your Loan Application Being Rejected

Licensed money lenders and banks will offer you a loan and require you to repay within the loan tenure.

Try these ways to increase your chances of loan approval.

How To Improve Your Chances Of Getting Your Loan Approved

Boost your chances of loan approval by doing the following:

Choose The Right Money Lender

Moneylender loan rejected? It’s not the end of the world.

Once you understand why your money lender loan could be rejected in Singapore, you stand a better chance of improving your loan approval chances.

If you’re in urgent need of cash, visit CreditMaster. Let us help you meet your financial obligations faster.

We will give you the best deals and serve you professionally and truthfully. Contact us now or apply for a loan today.

Contact us today for any financial assistance you might need. We promise to exceed your expectations.