Before the pandemic, many of us relied on personal loans to take care of our financial problems. The pandemic only made matters worse after a lockdown was introduced to stop the spread of the virus. This led to many companies and establishments closing up, thereby increasing the rate of unemployment.
With this new normal, the rate of people applying for a personal loan from different financial institutions has greatly increased. Sadly, the number of failed loan applications has also significantly increased. Disappointment from banks and other lending institutions is what many Filipinos have to deal with now.
If you are on this website, it is not the time to give up. We will share some valuable tips that will help improve your chances of getting a personal loan when you apply for one: digido.ph/articles/credit-score-in-the-philippines
Be Realistic with Amount You Want To Borrow
Don’t just put down an unrealistic amount because you want to take a loan. It is moneylender, not money laundering. Ensure you fill in the amount you can payback.
To get this, use the debt-to-income to calculate how much you can take based on your current income.
Know About The Personal Loans
Different financial institutions in the country offer so many personal loans. Finding the best one can be quite hard. This explains why it is essential to know about the personal loans available before you apply for one.
With this, you will know the interest rate, repayment period and application process.
Talk to Lenders
Also, you might need to talk to the lender. If you are applying from a bank, talk to their customer service. If you are applying from an online lending company, take time to read about them and their loan application process. Check their customer service link where you can get to communicate with them directly.
This may be time-consuming, but it is safe to know all about the loan process than applying with little or no information.
Have Your Loan Application Documents Ready
If you have spoken with your lender, you will know the documents needed for the application. Ensure you get all the documents ready before applying for the loan. It is essential to know that different financial institutions have different requirements, and their application process is quite different from one another.
You should contact your preferred lending company beforehand to know all the documents needed to fuel your application. For instance, if you are borrowing from a personal loan, you must have already had a credit card for at least a year.
Also, check your eligibility status. Typically, you must be at least 21 years before you can apply for a loan in the Philippines.
Improve Your Credit History
One of the reasons why most loan applications are not successful is due to the applicant’s poor credit history. The first thing lending companies look at is the credit history. They use this to determine if an applicant is trustworthy enough to return the loan. Ensure you pay every loan back on time and if you use a credit card, ensure you pay your balance regularly.
If you have a credit card with a good score, it is proof that you can pay back loans. With this, lenders would want to give you a loan here.
Sean Martin D. Plantado, head of customer service at Digido.ph, notes that few people in the Philippines know about credit ratings. Verification is done through the Philippine credit rating system. Many Filipinos don’t realize that credit rating has been around for a long time.
Check Your Assets and Liabilities
Assets are properties or investments that you own. In contrast, liabilities are the things that take money from you. They are your financial obligations. Lenders might consider your assets and liabilities when you apply for a loan.
So ensure you have more assets than liabilities before applying for a loan. If you have an outstanding loan on your credit card, ensure you pay it back before applying for the loan. Outstanding can influence your credit history, and this can affect how much you can borrow.
Make Sure You Have Proof of Income
If you are employed, you stand a better chance of having your loan approved than a freelancer. You must have a steady income before banks would consider your application. When applying for a loan, the bank and other online lending companies consider the possibility of returning the loan.
If you can prove that you have a steady income, it boosts your loan chances. Meanwhile, if you are self-employed, the bank or lending company can request for Tax Return ( ITR). This will show your financial statements for the past years.