Loans are handy when you’re having desperate financial times. In fact, 47.1% of Filipino adults borrowed money in 2015.
It is a relief to have instant cash within your reach. However, it is also disheartening to get rejected when you need it the most.
Lenders have various considerations when approving loans.
How will you get the sweet “yes”?
Positive Credit Report
Why do some Filipinos can’t get approved when applying for a loan? One factor lies in the past.
This means that credit report is the record of your previous loans and how you have handled these. Most Filipinos are still not aware that the Philippines now has a national credit bureau. The Republic Act No. 9510 mandated the creation of Credit Information Corporation.
“A credit information system will directly address the need for a reliable credit information concerning the credit standing and track record of borrowers.”
Suppose you borrowed from a registered money lender. You paid your loans on time and they reported your good paying habit to the credit bureau.
Then you went to a bank to apply for a housing loan. They will then look for your credit report in the credit bureau.
With the credit report on hand, the bank will then decide on what score to give it. While credit reports are completely based on how well you handled your loans, it will depend on the banks and other financial institutions (where you applied) on how they will give it a score.
The credit report helps money lenders, banks, and other financial institutions to keep track of the payment behaviors of their borrowers. This way they will know if you are creditworthy or not.
Banks usually do not approve borrowers who have no credit history.This is why most of them require their loan applicants to have an existing credit card to be sure that they already have a credit history. On the other hand, registered money lenders lend even to first-time borrowers.
That being said, there are factors that can ruin your credit score. Avoid missing your loan due dates and credit card bill payments to keep your credit history clean.
What To Do?
Use this to your advantage!
When you need a loan, get it from a registered money lender to be sure that your good payment history will be reported to the credit bureau. Pay your loans diligently on time. Positive reports naturally have high credit scores and lead to better chances of getting approved for future loans.
Of course, this comes as an obvious concern for lenders but not in the way you think.
Most borrowers speculate that lenders base their approval on the amount of income. Actually, it is way deeper than that.
Lenders are more concern with the stability of your source of income.
They think compulsive job hopper are risky borrowers. This is why most registered lenders will verify if the borrower is a regular employee working in the current company for the last six months.
How about the self-employed and OFW/Seafarer allottees?
Self-employed and allottees can also apply for a loan as long as they can prove that there is a regular cash inflow. Lenders require bank statements, Income Tax Return (ITR), proof of remittance, business permit, and other income supporting documents.
This gives lenders the assurance that you have the source of money to pay the loan.
What To Do?
When applying for a loan, make sure that you already prepared your company ID and payslips at least for the last month. If you have a Certificate of Employment, make sure that it includes your hiring date and the amount of your current salary.
If you are a freelancer, prepare your bank statements for the last six months. Small business owners should also submit their business permits and taxation documents. Allottees must make sure that they have a clear copy of their OFW or Seafarer’s passport and employment certificate.
Borrowing money is about making the lender trust you. Aside from the credit report, the money lender will verify the consistency of information you gave them.
Don’t be the type of borrower who falsifies documents just to get approved.
Credit agents are highly trained to spot information inconsistencies. They will know if the borrower is trying to sugarcoat an information such as making the salary seem higher or making it seem that they have been in a company for a longer time.
What To Do?
Naturally, lenders do not trust applications with falsified data. It is better to come clean and try your luck. You will be surprised that there are lenders who are more considerate than you think. Possibly the lender will also offer flexible alternatives to accommodate your application.
Complete Loan Application Form
Lenders receive hundreds of applications per day.
Usually, complete applications are processed faster and the incomplete ones are pushed to the pending list.
And to save resources, applications that take too long to be updated or completed will be rejected until you make a re-application.
What To Do?
Every time you fill up an application, make sure that everything is filled out properly.
Note that the information must be consistent with the ones on your submitted documents. If you don’t get an immediate reply, take the time to send a follow-up message. This way you will immediately know if you still have to complete some information.
Lenders put applications on hold if the data and required documents are incomplete.
This prolongs the process since they can’t completely verify your information. Obviously, if it takes too long, your loan application could get declined due to insufficient documents.
What To Do?
Get the list of required documents from your lender. If the lender has a website, you can easily see this in the Frequently Asked Questions (FAQ) page.
Online lending companies such as Cash Mart requires government-issued ID, company ID, and proof of billing. Take a picture or scan the documents before uploading them to the online application form. Make sure that the copies are clear and readable.
Do not forget to check your email or phone so you will not miss any clarification messages. Your lender will contact you if they need supporting documents to help them verify your information.
How can a loan calculator help your personal loan approval?
With the use of a loan calculator, you can easily see how much you can borrow, the interest charge, and the available payment terms.
Take time to consider how much you can handle to pay with ease because this is the same thing your lender will think.
Lenders also do not accept applications if you are asking for a term that does not fit your financial status. Responsible lenders only lend the amount which the borrower can practically pay. They also approve only the terms which can help you pay without sacrificing your basic needs.
Let’s say that your earn Php 15,000 a month. Do not expect your lender to lend you Php 15,000 to be paid in one month.
What To Do?
Use the loan calculator to make realistic loan amount request. Lenders will decline requests for outstanding balance way beyond the borrower’s capacity to pay.
Proof of Billing
Why do all lenders and banks ask for a proof of billing?
A proof of billing is a document that states your name and address. This can be an electricity, phone, cable subscription, or a credit card bill. Lenders and banks use proof of billing to verify your residence. If you are going to lend money to a stranger, you would want to know where the person lives, wouldn’t you?
What To Do?
Know and submit your proof of billing and required supplementary documents.
There are some lenders and banks who require a specific proof of billing.
If you live in your own house, then all you need to submit is a clear copy of the bill. Meralco bill is the most common preference. However, this is not possible for every Filipinos as some are only renting.
Do not hesitate to ask the lender if there are other alternatives just like in Cash Mart:
- If the bill is under another person’s, then you have to secure an authorization letter and the owner’s valid government ID.
- If you are renting and the owner is not around to make an authorization letter, you can submit the Lease Contract. If you have no Lease Contract you have to get a barangay clearance.
To increase your chance of getting approved, you have to find the best lender that suits your needs. Lenders have different loan products for various purposes. Also, they have their own set of requirements.
Take note that under Republic Act 9474, lending companies must be registered under the Securities and Exchange Commission. A responsible lender must be legal to operate, pay taxes and do not overcharge penalties.
They approve only the amount within your capacity to borrow and the best term to let you pay within sacrificing your basic needs.
What To Do?
Find a registered lender who offers flexibility that can match your need and requirements that you can easily comply.
Choose the one who can understand your personal situations and will adapt to your personal needs as much as possible.
Let’s say you are renting your home for a year now. You have no proof of billing because your Meralco bill is under the owner’s name. Then an understanding lender can give you alternative options such as a barangay clearance or an authorization letter. This way you can still get approved.
Final thoughts on Loan Approval
Getting declined is heartbreaking, though every lender has the right to reject an application. Naturally, a lender will not divulge the reason you got declined as it is part of their internal system.
Lending is about trust.
When applying for a loan, remember that you need to win the lender’ trust. If they trust that you can pay your loans on time, then they will approve your cash loan application. The consistency of information in your application, required documents and interview makes a huge chunk of approval decision.
Looking for easy cash loans? Cash Mart offers various flexible loans which best fits your financial needs at the most affordable interest rate. Experience the fastest loan process in the country with Cash Mart.