{"id":37367,"date":"2019-02-22T19:07:48","date_gmt":"2019-02-22T11:07:48","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=37367"},"modified":"2021-12-24T17:53:14","modified_gmt":"2021-12-24T09:53:14","slug":"rejected-with-good-credit-score","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/rejected-with-good-credit-score","title":{"rendered":"This Is Why Your Loan Is Rejected Despite A Good Credit Score"},"content":{"rendered":"<p>You make the effort to pay your bills on time every month and have tried hard to keep your credit limit under control to improve your financial health.<\/p>\n<p>All the hard work has paid off and you\u2019ve finally improved your credit score. Imagine after getting your finances in order, you apply for a personal loan only to get rejected.<\/p>\n<p>After the shock subsides, you might find yourself wondering why your application was denied despite having a great credit score.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A-high-credit-score-doesnt-guarantee-automatic-approval\"><\/span>A high credit score doesn&#8217;t guarantee automatic approval<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>This is because banks and financial institutions are not necessarily looking at the same credit score when they assess your credit application, as banks also have their own internal credit scoring methodology.<\/p>\n<p>A respectable credit score can help you achieve many things financially, but it is still only a guide. Banks have different ways to assess loan applications and the importance of your past financial history, whether good or bad, will vary.<\/p>\n<p>Their own benchmarks on risk tolerance differ and these criteria will affect how they implement their credit policies when you apply for a loan or to increase your credit facilities.<\/p>\n<p>Even if you have purchased houses and cars without any problems in the past, a new application for a line of credit today might still get rejected.<\/p>\n<p>Remember, your score is just one of many factors a bank will use to decide if they should extend you credit you just applied for, whether it is to buy a car, house or even a personal loan.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Top-reasons-people-with-high-credit-scores-still-get-rejected\"><\/span>Top reasons people with high credit scores still get rejected<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here\u2019s why an excellent credit score doesn\u2019t guarantee automatic approval.<\/p>\n<p>Watch out for these four areas in your financial profile that can still lead to rejection:<\/p>\n<ul>\n<li><strong>Employment<\/strong><br \/>\nBanks want to know you can earn the money to pay back what you borrowed and one of the best ways for them to assess this is if you are gainfully employed. If you cannot show that you are employed in some capacity at the time of your loan application, this could lead to an automatic rejection.<\/li>\n<li><strong>Income requirement<\/strong><br \/>\nEven if you can show that you are employed but if there is a change in your income amount, this can have negative consequences. While your credit score does not show your current income level, banks will want you to declare this vital information. If your income is lower than the bank&#8217;s requirement even by just a few ringgit, your application could get rejected.<\/li>\n<li><strong>Debt service ratio (DSR)<\/strong><br \/>\nIf 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.\u00a0Different banks use different ratios to determine their credit approval.\u00a0 <a href=\"http:\/\/www.bnm.gov.my\/files\/publication\/qb\/2017\/Q4\/p5.pdf\" target=\"_blank\" rel=\"nofollow noopener\">Bank Negara<\/a> recommends that Malaysians do not exceed a DSR of 60%.<\/li>\n<li><strong>Rapid accumulation of debt<\/strong><br \/>\nHow quickly your total debt has increased could also trigger alarm bells for banks. These signs can be detected if you have applied for credit many times in recent months, as banks might view this as unusually rapid accumulation of debt. Taking on too much debt too fast could also lead to rejection of your application.<\/li>\n<\/ul>\n<p>Even if you cleared all the items above, simple factors like your credit history is too short or you are financially inexperienced could also tip the scale to a rejection.<\/p>\n<p>Don\u2019t forget to double-check your application before submitting it as trivial mistakes can also result in a rejection. Overlooking small details like providing your personal information accurately without misspelling or adding numbers wrongly could lead to incomplete applications or cause the bank to be unable to confirm your personal details.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-can-you-do-next\"><\/span>What can you do next?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If your application is rejected, it is important you take steps to find out the reasons your loan was denied.<\/p>\n<p>If you do fall into one of the financial profiles listed above, take the time to address these issues properly. Rushing to apply again without addressing these problems will only damage your financial reputation further even if your credit score remains intact.<\/p>\n<p>Once you\u2019re in a better position to reapply, you should also try to avoid any big financial changes when you\u2019re about to submit your application and maintain your best spending and credit behaviour while your application is being evaluated.<\/p>\n<p>Keep in mind that while your credit score is not the only factor for banks to consider whether you qualify for a loan, it serves as a very good indicator of your chances for approval.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Watch out for these hidden financial pitfalls.<\/p>\n","protected":false},"author":35,"featured_media":37368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[309],"tags":[],"class_list":["post-37367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-creditscore"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>4 Reasons Why Your Loan Is Rejected Despite An Excellent Credit Score<\/title>\n<meta name=\"description\" content=\"Your credit score is a good indicator of your chances of approval. 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