Personal loans, while not requiring collateral, can be some of the hardest types of loans to obtain, thanks to the strict screening process for borrowers. Nonetheless, there is a short list of factors that could see your application for one rejected by the bank without a second thought. These factors are as follows:
1. Having the Worst Credit Score
The Credit Bureau Singapore’s credit scores range from 1000 to 2000 with the former being the lowest score and the latter highest one. While personal loans in Singapore can be accessed with bad credit scores, these loans are almost impossible to get with a CS of 1000. You will need to improve your credit score first before seeking a personal loan SG, especially if it is 1000.
2. Having a High Debt To Income Ratio(DTI ratio above 43% or 43:100)
When it comes to all types of loans, lenders do consider something called debt-to-income ratio(DTI). In a layman’s language, DTI ratio is a measure of how much you can afford to borrow based on your income and outstanding debts. Not only does this ratio indicate whether you are credit worthy or not, but also that you are financially responsible. A high DTI ratio(over 43% or 43:100) shows that too much of your income goes to debts and that adding you another debt would not be a great idea. Thus, you may not be able to get a personal loan in Singapore with this DTI ratio. You may want to clear off your outstanding debts first before seeking another debt.
3. Borrowing for a Purpose The Lender Does Not Approve Of
In as much as personal loans in Singapore can be used for almost any purpose, not every lender allows their loan to be used for just any purpose. For instance, some lenders will not agree to lend their money for purposes that are not profitable like birthdays, vacations, etc. Borrowing for a purpose that the lender does not approve of is a sure way to get your loan application rejected.
4. Requesting for an Unsecured Personal Loan Without a Stable Source of Income
Even though some personal loans do not require security, it is certainly not a good idea to go for one without a stable source of income. After all, no lender is prepared to offer an unsecured loan to a borrower without a guaranteed minimum income. Instead, request for a secured personal loan if you do not have a steady source of income.
Having the worst credit score, having a high debt-to-income ratio, borrowing for a purpose the lender does not approve of and requesting for an unsecured loan without a steady source of income can easily get your loan application rejected. To improve the chances of success with respect to loan application, be sure to improve your credit score and lower your DTI ration. Additionally, only borrow for a purpose that is supported by the lender and go for a secured loan in Singapore if you do not have a steady income source.