Why Your Personal Loan Application Was Rejected And What To Do

Every loan application tells a story — and if yours was rejected, it likely came down to something in your financial profile that didn’t meet the lender’s criteria. The good news? Once you understand what went wrong, you can take targeted steps to strengthen your next application.

>> MORE: No-credit-check loans in singapore (2025)

1. Low credit score 

In Singapore, most banks and financial institutions look at your Credit Bureau Singapore (CBS) score to decide if you’re a reliable borrower. This four-digit score ranges from 1,000 to 2,000, with higher numbers reflecting stronger credit health and lower risk for lenders.

A low score may be due to missed or late payments, maxing out your credit limits, or submitting multiple loan or credit card applications in a short period. These behaviours suggest you may be struggling with debt — which makes banks more cautious about approving your loan.

Here’s how scores are graded in Singapore:

>>MORE: Best loans in Singapore for bad credit

How to fix it: 

• Get your CBS report: Find out what’s lowering your score and address it directly.

• Rebuild your credit health: Pay all bills and debts on time, reduce outstanding balances, and avoid applying for new credit cards or loans unnecessarily.

• Stay consistent: Good habits take time, but consistent repayment behaviour will gradually improve your score and boost your chances of loan approval.

2. Your income may not meet the lender’s requirements

Income plays a big role in whether your personal loan gets approved. In Singapore, banks and licensed moneylenders have minimum income thresholds that vary depending on your residency status and employment type. If your income is irregular, too low, or poorly documented, lenders may view your application as high-risk.

>>MORE: Best low-income personal loans in Singapore 

How to fix it: Strengthen your case by declaring all income sources — including side hustles, freelance work, or rental income — and provide supporting documents like CPF contribution history, payslips, or bank statements. If your income is still below the minimum, consider applying with a co-borrower, reducing the loan amount, or exploring lenders with more flexible criteria, such as licensed moneylenders.

3. Your debt-to-income ratio exceeds the limit

Singapore’s Total Debt Servicing Ratio (TDSR) framework caps your total monthly debt repayments — including housing loans, personal loans, and credit card balances — at 55% of your gross monthly income. If your existing commitments are too high, lenders may view you as a higher-risk borrower, even if you meet the income requirement.

How to fix it: Start by reducing your outstanding debts, especially short-term obligations like credit card bills or small personal loans. Even paying off one or two can free up your monthly cash flow and improve your eligibility. You can also explore refinancing or consolidating debt to lower your total repayments. Once your debt-to-income ratio improves, you’ll have a stronger case for your next loan application.

4. You don’t meet the lender’s eligibility criteria

Sometimes, your loan application gets rejected not because of poor credit or income — but simply because you don’t meet the lender’s baseline requirements. These can include your age, how long you’ve been employed, your residency status (e.g. PR vs EP), or even the sector you work in. Self-employed individuals and those in probationary roles may also be seen as higher-risk. 

How to fix it: Before applying, always check the lender’s personal loan requirements. If you’re self-employed or newly employed, consider waiting until you’ve built a more stable income record — or explore lenders known to cater to your profile, such as those with flexible requirements for freelancers or self-employees.

5. Your application had incorrect or missing information

A simple error like a mistyped NRIC number, outdated income details, or missing supporting documents, can be enough to get your loan application rejected. Lenders rely on accurate information to assess your creditworthiness, and discrepancies may signal risk or even fraud.

How to fix it: Take the time to double-check your application before submitting. Ensure your income figures match your supporting documents (like payslips, CPF contributions, or tax returns), and that all personal details are correct. If you're unsure what to include, contact the lender for a checklist.

6. You applied for more than you can realistically borrow

If the loan amount you requested far exceeds what your income and liabilities can support, lenders may reject your application. Banks and licensed moneylenders in Singapore are bound by strict guidelines — including MAS regulations — that limit how much you can borrow based on your income tier.

How to fix it: Before applying, use a personal loan calculator to estimate how much you can comfortably borrow and repay. If you’re unsure, start with a smaller amount and work your way up after improving your credit standing or reducing existing debt.

7. Insufficient credit information

Sometimes, the problem isn’t bad credit. It’s simply not enough credit history.

For example, if you’ve just graduated and never applied for a credit card, or if you’ve always managed finances without borrowing, lenders won’t have enough data on how you handle repayments.

Without this track record, loan officers find it harder to assess your risk profile. As a result, your application may be delayed or even declined, not because you’re unreliable, but because there’s little evidence of your repayment behaviour.

How to fix it:

• Start small: Apply for a low-limit credit card or a basic credit facility, and pay it off on time.

• Keep accounts active: Use your credit card regularly for small purchases, and clear the balance monthly.

• Build consistency: Even a short but positive repayment history can improve your chances of approval later.

8. Unstable employment

Frequent job changes, especially during a loan application, can raise red flags for lenders. They may interpret this as a lack of steady income, making you appear riskier to lend to.

That said, not all employment shifts hurt your application. If you’re self-employed, or if you’ve switched jobs but stayed within the same industry, lenders often see this as continued stability. What matters most is proof that you can maintain a consistent income.

How to fix it:

• Show steady earnings: Prepare recent payslips, bank statements, or tax records to demonstrate reliable income.

• Highlight career continuity: If you’ve stayed in the same field, emphasise your professional track record.

• For self-employed borrowers: Provide Notice of Assessment (NOA) or business income statements to support your case.

If your loan application was denied, it doesn't mean the door is permanently closed. These strategies can help improve your odds the next time you apply:

1. Explore pre-qualification options

Some banks and comparison platforms including SingSaver, offer pre-qualifying tools that let you check your eligibility before applying. This “soft check” won’t impact your credit score and can give you a clearer sense of which loan products you’re more likely to qualify for. 

You’ll only have to undergo a hard credit check once you submit a formal loan application to the banks. 

2. Consider applying with a co-borrower

While rare in Singapore, certain financial institutions and cooperatives may allow a co-signer or joint applicant. This is typically someone with strong credit and stable income who agrees to share responsibility for the loan. Just make sure both parties understand the legal obligations involved.

>> MORE: Co-signing a personal loan

3. Use collateral to strengthen your application

If you’re struggling to qualify for an unsecured personal loan, consider a secured option instead. For instance, you might use a fixed deposit as collateral. This approach reduces the lender’s risk and may improve your approval odds, though it’s generally more common with banks than with licensed moneylenders.

>> MORE: Best secured loans in Singapore

4. Improve your credit score

A low credit score is one of the most common reasons for loan rejections. The good news? You can improve it with consistent habits that show lenders you’re a responsible borrower.

How to boost your score

• Pay bills on time: Late payments hurt your score. Set up automatic payments or reminders so you never miss a due date.

• Tackle outstanding debt: Focus on clearing smaller debts first to free up cash for bigger balances. This is also known as the snowball method.

• Limit new applications: Every new credit inquiry can drag down your score. Only apply when necessary.

Don’t forget to review your Credit Bureau Singapore (CBS) report regularly. Errors, like incorrect details or accounts that aren’t yours, can lower your score unfairly. Dispute inaccuracies early to keep your credit health intact.

5. Increase your income or reduce debt

A high debt-to-income ratio is another common reason for loan rejection. Lenders want to see that you have enough disposable income to manage repayments. You can improve your ratio in two ways: earning more or owing less.

How to improve your debt-to-income ratio:

• Boost your income: Take on part-time jobs, freelance projects, or gig work to create extra cash flow. Use this income to pay down debt faster.

• Target high-interest debt first: Clearing these balances reduces the amount you lose to interest over time, freeing up funds to handle other debts.

• Create a realistic budget: Track your spending, cut unnecessary expenses, and redirect the savings towards repayment. This not only improves your ratio but also strengthens overall financial health.

The more consistent your efforts, the better your chances of loan approval the next time you apply.

6. Reassess your loan needs and adjust the amount

Sometimes, loan rejections happen simply because you’ve asked for too much. If the amount requested is high compared to your income or financial profile, lenders may see it as a risk.

Applying for a smaller loan can increase your chances of approval and make repayments more manageable — reducing stress in the long run.

Tips to adjust your loan amount:

• Review your actual needs: Calculate how much you truly need to borrow, rather than applying for the maximum.

• Explore alternatives: Cut back on expenses or save more aggressively to reduce the loan amount required.

• Have a clear plan: Lenders are more confident when you can explain how the loan will be used. A well-thought-out purpose signals responsibility.

A smaller, well-justified loan is more likely to get the green light than an oversized one.

7. Pay off existing loans and bills to keep a clean credit history

Your credit history is one of the biggest factors lenders consider. Missed or late payments can seriously damage your profile, making you look like a high-risk borrower.

By paying bills and loans on time, you not only improve your credit score but also show lenders that you can manage your finances responsibly. A clean repayment record boosts your approval chances and builds long-term financial confidence.

How to stay on track:

• Set reminders or automate payments so you never miss a due date.

• Clear overdue balances quickly to prevent defaults from showing up on your record.

• Aim to keep your credit history spotless, as it strengthens your borrowing power over time.

8. Get a steady job

Lenders value stability. A steady job shows that you have not just a regular income, but also the ability to take on financial commitments responsibly.

Besides job stability, your income level matters too. If your current pay isn’t enough to support repayments, your application may be denied. In that case, it’s often better to wait until your income has improved for a few months before reapplying.

How to strengthen your profile: 

• Stay employed consistently: Frequent job changes can raise concerns about income stability.

• Show proof of income: Keep payslips and bank statements ready for your loan application.

• Improve earning power: Consider upgrading skills or taking side income to boost your repayment capacity.

The stronger your employment record, the more confident lenders will be in approving your loan.

9. Restructure outstanding debts

Before applying for a new loan, it’s best to clear existing debts first. Lenders are more likely to approve your application if they see you’re not already overstretched.

If repayment is tough, don’t ignore the problem; explore restructuring options instead. For example, you can negotiate with your bank to reduce interest charges or extend your repayment period, which lowers your monthly obligations.

Practical options to consider:

• Balance transfer or debt consolidation: Combine multiple debts into a single loan with a lower interest rate.

• Credit Counselling Singapore: Get professional help to negotiate with banks and set up a repayment plan.

• Debt negotiation: Reach out directly to your bank to discuss alternatives that make repayments more manageable.

10. Take a small loan and repay it on time

If your credit history is thin or your score is low, lenders may hesitate to grant you a large personal loan. One way to build trust is by starting small.

Taking out a smaller loan and repaying it punctually shows lenders that you can manage debt responsibly. Over time, this repayment track record strengthens your credit score and makes it easier to qualify for larger loans in the future.

How to build credibility: 

• Borrow within your means: Only take what you’re confident of repaying comfortably.

• Repay on time, every time: Set reminders or automate payments to avoid missed due dates.

• Be patient: It may take a few successful small loans before lenders feel confident approving a larger one.

Consistency is key — a clean repayment history is one of the strongest signals of creditworthiness.

11. Consider alternatives to banks in Singapore

If you’ve been rejected by banks, licensed money lenders may be another option. These lenders are regulated by the Ministry of Law (MinLaw), which sets rules on how much they can lend, the fees they charge, and the interest rates they’re allowed to offer.

Always check the official MinLaw list to ensure you’re borrowing from a licensed provider. Licensed money lenders typically have simpler requirements compared to banks and may approve applications even if your credit profile isn’t perfect.

What to keep in mind: 

• Do your checks: Only borrow from lenders listed on the MinLaw registry.

• Understand the costs: Interest rates and fees may be higher than banks, so read the terms carefully.

• Stay responsible: Regardless of where you borrow from, paying on time and maintaining a clean repayment record is key to improving future approval chances.

If your loan application has been denied, avoid the temptation to reapply immediately. It’s best to wait at least four to six months before trying again — and only after you’ve addressed the reasons for your rejection.

Use this time to review your credit report, pay down existing debts, or prepare stronger supporting documents. Reapplying without fixing the issue could lead to repeated rejections and further harm your credit score.

Also, steer clear of submitting applications to multiple lenders at once. Each credit check leaves a record, and too many hard inquiries in a short period can signal risk to banks and reduce your chances of approval. Take a targeted, informed approach instead.

>>MORE: Compare the best personal loans in Singapore

If your loan application was denied and you urgently need funds, there are other short-term financing options to explore — though each comes with its own pros and cons.

• Buy now, pay later (BNPL): Major retailers in Singapore partner with BNPL providers like Atome, ShopBack PayLater, or Pace to offer interest-free instalment plans on purchases. This BNPL option is typically used for retail spending, and repayment is split over several weeks or months. It's best for non-essential, planned purchases you can repay comfortably.
  
  

• Cash advance or early wage access apps: Apps like Earned Wage Access (EWA) solutions — sometimes offered by employers — allow workers to tap into a portion of their upcoming salary before payday. Repayments are usually deducted from your next salary cycle. Watch out for subscription fees or express payout charges, and avoid relying on this frequently.
  
  

• Borrowing from family or friends: Borrowing money from someone you trust can bypass the usual credit checks and interest charges. However, be clear about repayment terms — ideally in writing — to avoid misunderstandings and preserve your relationship.
  
  

• Community or social assistance programmes: If you're facing genuine financial hardship, look into government and grassroots support schemes. ComCare, for instance, offers temporary financial help for essential needs like groceries and utilities. Local CDCs (Community Development Councils) and Family Service Centres may also have emergency assistance grants.
  
  

• Pawnshop loans: Licensed pawnshops in Singapore let you pledge valuable items like gold or luxury watches as collateral for a short-term loan. While no credit check is needed, interest rates are high, and you risk losing your item if you don’t repay the loan in time. Use this option only if you're confident you can redeem your item.

• >> MORE: Financial assistance programmes to avoid payday loans

A rejected loan application doesn’t mean your options are closed — it simply highlights areas to improve. Whether it’s strengthening your credit score, lowering your debt-to-income ratio, or ensuring you meet eligibility criteria, making small but consistent changes can significantly improve your approval chances.

Use this time wisely to fix the gaps, build a stronger financial profile, and only reapply when you’re ready. By approaching the process with a clear plan and realistic expectations, you’ll be better positioned to secure the right personal loan for your needs.