Why your bank loan was rejected?

Woman applying for personal loan in Singapore and got rejected.
checking blog post using mobile

Why your bank loan was rejected?

checking blog post using mobile
Woman applying for personal loan in Singapore and got rejected.



While most of us would prefer to cruise through life without having to take up a loan or credit, that’s not really realistic unless you were born with a silver spoon in your mouth. The truth is that most people end up taking some kind of loan or credit in their life, but some, seem to get it easier than others.

If you are one of those who has unfortunately been rejected for a loan, the first thing you need to do is to figure out why, and either tackle the problem head on or seek alternative financing solutions.

Here are some common reasons why your bank loan was rejected, and steps to take to get the loan you need.

Common Bank Loan Rejections

1.    Bad Credit History

Banks in Singapore have access to your credit history via the Credit Bureau Singapore(CBS). Your credit gives a summary of your credit repayment capability. The credit report enables banks and other financial institution to make better lending decisions when you apply for credit and loans.

It is therefore important that you maintain a good repayment record. Non-repayments or overdue repayments will be reflected in your credit report and has the potential to negatively affect your loan application.

For instance, if you’ve owed a bank some money many years ago and went away without repaying, it is highly unlikely the bank will grant you a loan in the future. If you aren’t sure about how you score, approach the credit bureaus for a copy of your credit report so you are aware of the information contained within.

What you can do: Check that all information is correct on the report, and if not, seek to correct it with the banking institution. Alternatively, you may also want to seek out loans from legal moneylenders who use a separate credit bureau.

2.    Unstable Unemployment

Your salary information gives your debtors an idea of your ability to repay. If your employment history hasn’t been stable and consistent(frequently changing jobs), it may result in rejection of your loan.

What you can do: Before you apply for a loan, ensure that you’ve got a stable employment for at least 6 months.

3.    Insufficient Credit History

If you’ve never applied for credit before, your credit report might be pretty empty. This gives your lenders little indication of your credit-worthiness, making it difficult to gauge if they should grant you the loan.

What you can do: The easiest way is to apply for a credit card and use a little credit, ensuring that you pay the bills promptly in order to help you build up your credit score.

4.    You are a foreigner

If building a credit history is required for a local, it can be harder for a foreigner who has only been in Singapore for a short period of time. If you are a foreigner, ensure that you have an employment pass that is valid for at least a year.

How to move on from a loan rejection

While you might feel dejected from the rejection, the best way is to act rationally to identify the possible problem and tackle it head on. Here are some steps you can take to rectify the situation:

  • Request for a copy of your credit report to identify ay possible issues or bad debts
  • Rectify any problems you may have on the credit report(paying off bad debts)
  • Be patient – if you’ve only been rejected for the loan recently, you may want to wait for a few months before applying for another loan with a different bank
  • Alternatively, you can seek out a legal moneylender to see if you can get a loan. Legal moneylenders are less stringent on the lending criteria, but their interest rates can be much higher as compared to a bank. Weigh the pros and cons before applying for one.

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