Whether it is for an emergency or an investment, taking out a loan can prove to be a daunting task if you have a bad credit score. The first factor to consider before applying for a loan is your current financial and credit standing. Not every licensed moneylender in Singapore is willing to pass your loan application without considering your credit score. Even if they do, there is a good chance they will charge high interest.
The good news is that even with a poor financial standing, you can obtain a loan. These essential tips will help you in getting a quick and easy loan approval in Singapore.
Find Out Your Credit Score
To ascertain your current financial standing, every loan applicant needs to check their credit score. Every individual gets one credit report free every year. You can monitor your credit score using the online credit score checking tools or get a print of your credit report from the credit bureau.
There are cases when users detect errors in their credit reports. If you identify a mistake, you can send a report to the credit bureau and ask them to verify and correct the report. Moreover, a credit report will give you an insight into your financial history.
Approach the Best Lending Institution
The loan qualification terms may vary from lender to lender. Even people with bad credit scores can have their loan applications approved almost instantly if they choose the right lending institution.
Major banks reject loan applications of users with a low credit score. Conduct thorough research on the lending institution before paying an upfront fee. Shopping for the best lending institution can be a tedious task, especially for borrowers who don’t have an excellent financial history. You can ask your friends, colleagues, relatives, and financial agents for lender recommendations.
A Cosigner and Collateral Will Do the Job
Collateral is your personal property, which is equal to the value of the loan. To secure the loan, you can offer your belongings as collateral to the lending institution.
The lenders are reluctant to pass the loan application of the borrower with no credit history at all. In such cases, you may want to consider bringing a cosigner for easy loan application approval. A cosigner acts as the guarantee that you will repay the loan by the due date. The cosigner must have a good credit score, low debt-to-income ratio, and decent credit history. A cosigner should be someone who shares a strong relationship with you since the lending institution will turn to the cosigner if you don’t clear your dues on time.
Pay off the Existing Debts
The fastest and easiest way to improve your credit score is by paying off the current debts. You can opt for a debt consolidation loan if you have taken a loan from different lenders. While it might not reduce your loan amount, debt consolidation can help to simplify the loan repayment process.
