Various Factors That Determine Personal Loan Rejection

Personal loans are processed depending on your employment-income status, in which you can choose to pay back through monthly instalments. Whether you want to cover uncertain expenses or pay off your credit, a personal loan may seem like a viable option. But what if the financial institution or the licensed moneylender rejects your personal loan request? How will you be able to finance your urgent requirements?

Licensed moneylenders would require you to guarantee that you are able to repay your full loan by providing the relevant proof. This makes quick loans impossible and ensures that your loan application is eligible. Even a minor error in your loan application or financial records can lead to the rejection of your loan request. Here are the main reasons why licensed moneylenders decline your loan application.

Poor Credit History or Bad Credit Score

Poor credit history may not allow you to borrow even a small loan from licensed moneylenders in Singapore. Reputable moneylenders do not offer loans to people with a credit score of 600 and lower.

You do not need to have an extremely high credit score to qualify for a personal loan. However, your credit score must be sufficient to assure the lender that you are a trustworthy and reliable borrower. If your credit points lie between 750 and 800, then you have a good credit score whereas a score above 620 is considered fair. Any credit score that falls below this range is regarded as poor.

Annual Income Does Not Meet Minimum Income Requirement

Banks and financial institutions set minimum annual income criteria to determine the eligibility of the borrowers. The minimum income may vary from each lender. If you are applying for a personal loan, the lender will consider your annual income before accepting your request. If the amount of your income does not meet their standards, they will most likely reject your loan application.

Improper Documentation

Licensed moneylenders are not allowed to conduct their business processes online.  Licensed moneylenders now require individuals to present themselves for a face-to-face verification of the borrower in the approved premises. Borrowers will need to make sure that their information is provided accurately. Thus, it is best to check your personal ID cards and other financial records before filling up the loan application form. Even a minor inconsistency can result in the loan application being rejected.

Higher Existing Debts

Having too many existing debts can also result in the rejection of your personal loan application. This happens when you are overwhelmed with many loans from various lenders. In such cases, the lending institution will not want to accept your loan application as they believe you are likely to end up insolvent. A high debt ratio can make you appear as a “risky borrower”.

If your loan application is being rejected due to a significant number of existing loans, it is crucial to pay them off first.


Personal loans come with a high-interest rate. However, they are the most suitable option for borrowers who are in urgent need of cash. Consider the points mentioned above to reduce the chances of your loan application being rejected.