Indeed, whenever the bank turns you down, it can result in an unpleasant feeling. Sometimes, this can lead to questioning your self-worth or your ability. This rejection will provide you with negative vibes that can make you lose your focus.
That rejection email can sometimes dampen your mood. This can vanish your happy thoughts into thin air. Then, you will contemplate on why your job application, loan application, or travel visa application has been denied.
Thus, in this article, we will discuss some of the common reasons why financial institutions, licensed money lender Singapore, and banks decide to reject your loan application.
Poor Credit Score or History
Lending institutions such as Lender SG use your credit score or history to evaluate your worthiness in providing you with a loan. They can rate your profile with three-digit numbers that they call as the credit score. It’s either you have a low credit score or you have negative marks that are reflected in your credit report.
If you have a low credit score, this means that you are at high risk for creditors. This is assuming that you will have a hard time repaying for your borrowed money on time.
Indeed, your credit history can become your financial resume. Banks and licensed money lender Singapore would examine your financial activities plus relationships with lending companies. Credit authorities will report about your paid or unpaid postpaid accounts that are registered under your name.
Factors that Contribute to a Low Credit Score
Failure to Stick to a Credit Agreement
This will happen if you fail to pay off your loan according to the contract. Failure can mean deviating from the contract that you have signed. For example, you borrowed money for a tenure of 15 days. Then, you fail to settle your balances within that period.
You are a Victim of Identity Theft
Recently, some fraudsters steal credit card information and make it available in the black market. Indeed, when you become a victim of identity theft, it will not be a comfortable journey. You will have to replace your card, call the bank to block it, and submit a report. It will take some time before the banks can release their verdict regarding the transactions made on your card. Until the dispute is settled, your credit profile will take a low dip. This might cause the decline of your loan application in the end.
You Don’t Have Any Credit History
Credit profiles will include all your borrowings in the past. First-time applicants will often have trouble with having their loan to be granted. This is because licensed moneylenders do not have any basis for their loans for evaluation. As such, begin your credit profile by setting an account with banks or lending institutions through secured credit cards.
You Select the Wrong Credit Card
You might have previously owned a credit card which does not suit your needs. You just use it for purchase and set it aside since you do not rip any benefits from it. Indeed, the right kind of credit card will provide you with perks that can help you save more and spend reasonably.
You Pay the Minimum Only
The credit card bills will indicate your full balance plus, the minimum amount required. More often than not, you will be tempted to pay the minimum and have a considerable balance per month. However, you must realize that more interest charges will incur whenever more balances are left in your account. Remember, the more significant amounts you have will equate to more earnings for the bank.
How to Deal With It?
One effective tip that you can try is to rebuild your credit score. Rebuilding your credit score will take some time. But the first step that you can try is to pay your outstanding debt. Financial institutions such as Lender SG have prepared payment schemes and they always welcome negotiations. When you pay your loan, you can ask them to have it deleted from your profile. When you try to pay off, you can begin with secured loans plus credit cards so you can establish a better profile.
Not Enough Income
Lenders, banks, and some financial institutions such as Lender SG, do take note of your income. This is because they wanted to make sure that you can sustain the monthly repayments. If your salary is not enough to accommodate your financial responsibilities, then your chances of having your loan approved are low.
As such, make sure that you check the minimum income requirement of the moneylender company that you are applying to. This will make it easier for you to push through the loan or not. Some people that have low-income resorts to other means so they can earn extra money. With this, they can pay their liabilities on time and have a good credit score.