When it comes to applying for loans, your credit rating plays a major factor. Depending on the type of loans, lenders will typically favor one credit rank over another.
For example, if you have a ‘clean slate,’ you can easily apply for a personal loan Singapore or cash advance. On the other hand, the situation is different for a business loan in Singapore for SME wherein your business plan and societal status can play major roles.
To have initial ideas prior to loan application, you may check out the top 3 factors that directly or indirectly affect your credit rating.
Any Outstanding Loans
If you have outstanding loans, the moneylender will take that into consideration. While you won’t be forced in sharing your previous loan responsibilities – whether unpaid or not – the lender will eventually find out about it. Do not underestimate the investigative qualities of lenders. They can even read your actions the moment you enter the establishment.
Your credit history and previous transactions will also be explored by the lender. Any transaction you made can make an impact to your credit rating. If your credit is on the red, there’s a big chance that the lender will decline your application. Since loans are about risks, declining the application is just part of the risk management process.
Source of Income
All lenders will take your source/s of income into account. This is, perhaps, the primary factor that can determine if your application will be approved or not. Basically, lenders want to entrust their money to people who are earning enough and legally of course.
Once you understand the nature of these factors, you can start making the necessary changes to your financial state. But you should also understand that credit rating factors cannot be totally controlled. It all depends on the credit investigating arm of the personal loan lender company.