Yes, having excellent credit makes it significantly easier to get approved for loans and credit cards – of course with the best rates and terms. However, there are a number of factors that creditors take into account that aren’t part of your credit rating when determining whether or not you will be eligible. Even people with a credit score solidly in the “excellent” or “exceptional” range of 600 or above could still get denied under certain circumstances. Here are 5 reasons why your loan could be denied even with an excellent credit score.

1. Insufficient income

While income is not considered into your credit scores, some lenders will have minimum income requirements. Having an earning less than minimum shows to a lender that you may have a difficult time repaying a new debt payment. Even if you are just RM1 short of the minimum, you could still be rejected, regardless of your score.

2. High debt-to-income ratio (DTI)

A high debt-to-income ratio looks at how high your debt payments are in comparison to your income. Even with high income, your high monthly debt payments could indicate financial instability. For example, if your monthly repayments on existing housing, car, credit cards or even student loans already eat up close to 50% of your monthly income, banks may decide you already have too much debt to be able to take on a new one. Different banks use different ratios to determine their credit approval.

3. Employment history

A short or unstable employment history may come across deterrent to creditors. It is crucial for some lenders to see that you’ve been consistently employed for at least 2 years, and may want to verify your employment before approving your loan application. This is because lenders or other creditors worry that you will lose or quit your job and not be able to make payments.

4. Savings or cash assets

Lenders may want to see that you have savings or other cash available. Showing that you have money set aside assures creditors that you have the means to make your loan payment if an unexpected expense comes up. If you don’t have any of these, lenders will think twice before approving your loan or credit as they have to factor in unexpected situations where you might not be able to repay your debts.

5. Rapid accumulation of debt

How quickly your total debt has increased could also trigger warning for banks. These signs can be detected if you have applied for credit for many times in recent months, as banks might view this as unusually rapid accumulation of debt. Taking on too much debt too fast also leads to rejection of your application.

So, What Should You Do Now?

If your application is rejected, it is important you take steps to find out the reasons why it was denied, but being rejected does not mean you will never be able to apply for a loan again. You need to keep in mind that while your credit score is not the only factor that determines whether you qualify for a loan, there are other ways of applying and one of the best options is through private lenders like Finsource Credit where they take into consideration that there are many other factors that affects your bad credit scores which does not necessarily categorise you as a risky borrower.

Still facing problems getting your loan to approve from your bank, and wondering what are other ways you can finance your business? Finsource Credit’s doors always welcomes you!

Offering 3 types of loans such as clean loans, property loans and 2 in 1 financing suited to meet your financial needs.

Remember, if you need any sort of immediate financial solutions, you can always look for Finsource Credit. Contact us today to learn more about how we can be of assistance to your financing needs

contact us: 03-2712 4333


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