You can use a personal loan for just about anything. Whether it’s covering basic expenses, home renovation, paying mortgages, or unexpected emergencies, a personal loan is a convenient first option. Moreover, it is also one of Singapore’s most accessible loan options – if you know how!
For some, taking out a personal loan may have been a challenging experience. At one point, one may have been declined or rejected for reasons that are unclear to them. This experience may be hard to accept, but it should not stop you from trying again.
So, if you’ve been turned down before, try not to lose hope. Instead, know why you are getting declined and work on ways to increase your chances of getting approved. There are many ways to do this – find out here!
Ways To Increase Your Chances of Getting a Personal Loan
Personal loans are also a great financial tool for achieving your goals. Plus, you’ll never know when you’ll need that extra cash for something important. So, it’s best to prepare and be in the know about how to boost your chances of getting a personal loan approved.
Here are eight pro tips that will help you increase your approval chances:
Know your credit score and learn how to improve it.
Credit scores are a primary factor in determining creditworthiness, especially for most banks and other financial institutions. Lenders will pull up a copy of your credit report as it reflects your payment history, debt level, and your credit utilization ratio.
A strong credit score will notch up your chances, so you should also know how to improve your credit score. A few ways to do this are
- Pay your bills or monthly payments diligently and on time.
- Reduce your monthly debt by paying off your existing debt.
- Have a good mix of credit products.
- Only apply for a few credit cards or personal loans from different lenders or banks within a short period.
If you don’t have enough credit history or score, find other options, such as a licensed moneylender. Moneylenders do not approve personal loans solely on credit score; this is also an excellent way to build your credit score.
Find a lender that matches your financial needs.
If you are still building a good credit score, find a lender that will accept your current status. Moneylenders accept applicants with no credit history or good credit scores. If you choose to go to a moneylender, make sure they are on the Ministry of Law – list of licensed moneylenders.
Check the lender’s eligibility criteria and lending requirements. Choose your lender carefully and diligently to end up with the right lender. You may also check the lender’s reputation through customer feedback and Google reviews.
Take your time to review their loan deals by checking out a lender’s interest rate, fees, and repayment terms. This way, you won’t settle for a lender with an unaffordable loan.
Apply for a personal loan amount that you can handle repaying.
Some lenders consider the amount of money a borrower is applying for in deciding whether to approve. Requesting more money indicates significant risk. Apply for only the minimum loan amount, or use a loan calculator to get the right amount you can apply for.
This amount is based on your income, current liabilities, debt-to-income ratio, and other factors. It also indicates how much you can repay, given your current financial flow.
Consider applying with a co-borrower.
If you need more confidence about your borrowing credentials, consider applying with a co-borrower. Consider your spouse, parents, or someone with a higher income to co-sign for you. A co-borrower should be someone you trust and equally responsible in case of an unforeseen event.
With a co-borrower, your chances of getting approved increase, and you may also get approved with a lower interest rate. Co-borrowers, especially those with good credit scores, give lenders a sense of security in repaying the loan.
Only apply for a few loans at one time.
Applying for loans or credit accounts simultaneously from multiple lenders or banks within a short period leads to a hard inquiry on your credit report. Hard inquiries stay on your credit reports for two years and may cause a significant drop in your credit score. Lenders view this to be predictive of credit risk and may also get your loan rejected.
Indicate all your sources of income.
Borrowers must show that they have a steady income and can repay the loan amount. The more sources of income, the better your chances could be. If you have a business or a rental income on top of your employment, indicate these as your sources.
Be ready with your income and identification documents.
Credit issuers will require income and identification documents with your personal loan application. Most lenders will require documents such as
- Your NRIC or passport (if you are a foreigner)
- Proof of residence (utility bills or tenancy agreement)
- Proof of Income (CPF contributions, recent payslips, tax statements)
Ensure you have a physical copy for the bank or lender’s verification.
Opt for a more extended repayment period.
Personal loan lenders also offer varying repayment terms and periods. Choose a repayment period depending on your budget, other financial obligations, and your capacity to repay. A more extended repayment period also lowers the amount of your monthly repayments.
If the loan is large, opt for a longer repayment period to reduce the risk of missing out or defaulting on your payments.
Taking out a personal loan will immediately solve your financial worries. But this decision comes with responsibility and proper financial planning. Make sure you use the money for the right reasons and purposes to avoid future debt problems.
- Use a personal loan calculator to see if you can afford monthly repayments.
- Refrain from taking on large amounts that could drain your resources or put you into deep debt.
- Build your credit score so that you can get better personal loan offers.
Do you need cash quickly? 365 Credit Solutions is a trusted licensed moneylender that offers excellent personal loan packages. Visit our website today and get your loan approved in as fast as 30 minutes.