What You Can Do to Improve Your Chances of a Personal Loan Approval?
For people who have financial problems, they are often reluctant to go to banks or moneylenders to apply for personal loans because they believe it is hard to get an approval for them.
Personal loans are quite beneficial because they can help anyone who needs funds to pay for things they need to pay for such as sudden expenditures, businesses and other crucial expenses. Applying for it is actually very easy, especially if you know the requirements and got the documents necessary for them. However, getting it approved by banks or moneylenders is not guaranteed once you submit it because of your credit score, financial status and requirements will be examined carefully.
If this is your first time to apply for a personal loan, do not worry! There are some tricks you can do to improve your application’s chances for approval.
- Know the minimum age and income requirements
The first thing you have to consider before you apply for a personal loan is by making sure you meet the age requirement and the income requirement. Applicants for personal loans must be 21 to 65 years old and they must have a minimum income of at least $20,000 a year.
If they have less than $20,000 a year, moneylenders will still be open into lending money; but the amount that will be loaned is smaller.
- Make Sure Your Income Source is Strong
Aside from reaching the minimum age and income requirements, you must also show that you have the means to pay the loans. For employed borrowers, they need to show their certificate of employment, payment slip and tax report. For self-employed borrowers, they must show all their sources of income.
If you are just new in the business or in your company, it is best you wait for a few months before you can borrow from moneylenders.
- Boost Your Credit Rating
Credit ratings are used by banks and moneylenders to determine if you are a good borrower or if you present no risk to the lender.
If you want to build your credit rating, here are some tips to help you out:
- Know your credit history
If you are just applying for a loan, you need to determine if your credit history is good enough for banks and moneylenders to approve your application. You can request your credit report through the Credit Bureau Singapore, which would detail all your financial transactions. Should you have any black marks due to repayments, closed accounts or defaulted loans, you should immediately seek the assistance of financial experts to sort out your problem.
- Reduce your credit card use
If you own a lot of credit cards, it is ideal you limit them to one or two so you will not be tempted to use them all the time. Cancel the ones with high interest or those which you do not use. Keep the old ones that have a long history of payments since it will help your credit score.
- Pay on time
Any bill that you may have, pay them as early as you could because any late payment will be seen as a bad point against you by banks or moneylenders.
- Restrain applying for credit
If you find yourself in need for more funds, do not apply for another loan or credit card because too many applications would show moneylenders and banks alike that you are trying to borrow more than what you can.
- Reduce your credit use
If you have a line of credit with banks, do not max them out because it will affect your credit score and suggest you will have problems paying off your dues.
- Pay more than the minimum fee
If you tend to use your cards often, it is ideal that you pay more than the suggested minimum fee so you can reduce interest rates and your bills.
- Know What Loan You Need
When you apply for a personal loan, you must be well-aware as to where you will use the loan for. Personal loans come in various types, each supporting a specific expense or need. If you end up applying for the wrong loan, you may find it difficult to escape the one you signed up for.
Before you apply for a loan, speak to the moneylender about the loan you really need so they can advise you as to which loan you should take out. If you plan to renovate your house, you should get a renovation loan rather than a regular personal loan.
Specific loan packages are much cheaper than personal loans in terms of their interest rate. Personal loans come with interest rates from 6 to 8% while specific loans come with interest rates of around 2%.
- Check the Market Status
The country’s economic condition is also a good way to determine if banks or moneylenders will be more open to accepting loan applications. If the market is not very stable, banks and moneylenders will not be open to accepting loans that easily because they do not have much credit to work on for these applications. If the market is stable, your application will be approved faster and you can get it in cheaper rates.
Of course, you should check all the moneylenders offering the loans you need and check which has the favourable rates that would work for your needs.
If you are applying for a personal loan, you must remember that your requirements must be 100% perfect to get it approved because if you do not, your chances will be reduced immensely.
Banks and moneylenders alike have to see if you are a good borrower before they approve your application and your requirements will be a key to it. If you have any problems with any one of your requirements, make sure to act upon it before you apply so you won’t have to wait for a long time.
If you are patient and ensure all your documents are in order, your loans will be approved without any issues and you may even get a better deal than what you were expecting