Personal Finance

Why Was Your Moneylender Loan Rejected?

November 30, 2022

Personal loans are given out depending on your employment and income, and you can choose to pay them back over time in monthly payments. 

A personal loan can be useful if you need to consolidate your debts or cover unexpected expenses. 

But what if you have your moneylender loan rejected by a bank or a registered money lender? How will you resolve issues that require immediate attention?

To borrow money from a legitimate money lender, you must prove that you have the ability to repay it. If there’s even the slightest inaccuracy in your loan application or supporting financial records, your loan request may be denied. 

Let’s look at some of the most common reasons why legitimate money lender loans could be rejected.

Reasons Why Your Loan Application Was Rejected

Let’s look at why your loan application may have been turned down by a bank or licensed money lender 

Poor Credit History Or Score

It may be difficult to get a personal loan in Singapore with a bad credit score. A loan from a reliable lender like a bank is unlikely if your credit score is in the 1,000 range. 

Conversely, a high credit score that is close to 2,000 will sufficiently convince the lender that you will be a responsible borrower. 

Thankfully, most licensed money lenders place more importance on your annual income than your credit score. 

You Have Too Much Debt 

No lender will give a loan to someone who already is struggling with many unpaid existing debts. 

Before you apply for a new loan, make sure your Total Debt Servicing Ratio (TDSR), or the percentage of your income that you spend on debt repayment, is not more than 55% of your monthly income.

You Don’t Earn Enough Every Year 

Your income is a crucial consideration for lenders when it comes to unsecured loans, which do not require collateral.

In fact, to lenders, the lower your income, the more likely you are to default on your loan. No lender will take the risk in giving you a loan when your income is barely sufficient to cover your monthly installments. 

So what are the income requirements? 

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.

Licensed money lenders have much lower limits.   

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 matter 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. 

So for your loan to be approved, you need a steady and stable income.

You Made Mistakes On Your Loan Application 

It is crucial to fill up the loan application form correctly. 

Ensure that all your financial documents are in good order before filling up the loan application. It only takes one tiny mistake for a loan application to be rejected.


How To Avoid Being Rejected

For starters, get a copy of your credit report form Credit Bureau Singapore (CBS). You can request a soft copy online or a hard copy from the CBS office or SingPost outlets. 

It costs $6.42 (including GST), and an additional $2 for multiple delivery modes. For an extra administrative fee of $17.12, you can pick up your report in only two hours at any SingPost outlet.

You are eligible for a free credit report if you have recently applied for a new line of credit with any CBS member.

After you get the credit report, peruse it carefully. Verify that all of the information in your credit report is accurate and belongs to you. 

Correct any inaccuracies that you find in your credit report and submit a request for them to be rectified. 

This is because bad records such as unpaid payments can make it challenging to secure a loan. 

To dispute inaccurate information on your credit report, you can contact CBS. Incorrect or missing data can be contested without any financial penalty. 

How To Improve Your Chances Of Getting Your Loan Approved

What do you need to do to ensure that your next loan application gets approved? Here are a few ways to improve your chances.

Make Some Adjustments 

It would help if you start making some tweaks. For example, improve your credit score by making timely payments, reduce your debt-to-income (DTI) ratio, and remove any errors or negative information from your credit report. 

Improve Your Debt-To-Income Ratio 

Loan applications with a DTI ratio above a certain threshold are more likely to be denied. 

Your DTI ratio refers to the percentage of your monthly income that goes toward repaying debts. 

Lenders use this ratio to determine if you’re able to take on more debt.

A high DTI indicates that you’re already struggling to repay your existing debts and consequently may not be able to make your repayments on time. 

For this reason, most lenders will reject applications with a high DTI.

Don’t Ask For Too Much 

If your credit score is not great but you are asking to borrow a sizeable amount, this increases your chances of being turned down. 

This is because lenders will deem you to be a credit risk. So be realistic and borrow only what you can afford to repay. 

Avoid Applying For More Loans

If you have an existing loan, wait at least three months before applying for another one. Applying too quickly will just set you up for another rejection.

Find The Right Lender Now

No one likes having their moneylender loan rejected. But if you follow our tips and you’re your cards right, you may have a chance with a licensed money lender. 

Licensed money lenders are more lenient and have a bigger risk appetite than banks, so you should have a good chance of getting the loan you need. However, their interest rates – maximum of 4% per month – are higher than that of banks. 

If you need a loan, visit GS Credit. We are a reputable licensed money lender that offers plenty of loan options at affordable rates. 

Get in touch with us now or apply for a loan using your Singpass today. It just takes five minutes.

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