Getting a personal loan can be challenging for some people, but it’s especially important for those who need cash right away. These needs can be used for several purposes such as property renovations, buying new vehicles, emergency funds, or business needs. Several factors, such as late previous loan payments, can lead to a rejection of a loan application.
President Director of PT CRIF Financial Information Institute (CLIK) Leonardo Lapalorcia, emphasized that the main factor that causes loan applications to be rejected is the lack of awareness of debtors about their credit history. Most cases that occur are late payments or even failure to repay loans, which results in loan rejection or higher interest. “A good credit score significantly increases the chances of loan approval and even lower interest rates, so loans will be easier to approve,” he said.
In addition to credit history, it is very important for debtors to monitor their credit utilization ratio. This ratio measures the amount of credit used compared to the total credit limit. By ensuring that credit card usage remains below 30% of the total limit, the debtor demonstrates responsible credit management. This can affect the debtor’s credit score positively.
However, even if your credit application is rejected, you still have the opportunity to reapply. Here are some valuable tips from CLIK:
- Know your credit score
Credit score is one of the key parameters to consider before applying for a loan. Although you can obtain a credit report through the Financial Information Service System (SLIK) from the Financial Services Authority (OJK), to get a more detailed credit score and analysis, you can rely on Private Credit Bureaus such as PT CRIF Lembaga Informasi Financial (CLIK). A good credit score, which comes from a variety of transaction data sources, gives lenders a clearer picture of your credit capacity to get a loan and your ability to repay it.
- Pay off outstanding loans
Loan arrears greatly affect your credit score. To increase it, you need to make sure that your loans or debts, such as pay-later platform loans and credit cards, are to be paid off immediately. Paying off loans on time can help improve your credit score and overall credit history.
- Avoid applying for loans to multiple platforms at the same time
Applying for loans from multiple places at the same time can hurt your credit score. Creditors see repeated rejections as a high-risk signal, reducing the likelihood of subsequent submissions being approved.
- Monitor and compare your credit score
It’s important to monitor and compare your credit score before applying for a loan to help maximize the application process and assess creditworthiness. You can learn more about this by considering Private Credit Bureaus such as PT CRIF Lembaga Informasi Financial (CLIK) for more comprehensive results. CLIK offers more detailed information with more diverse processed data, including transaction history from banking activities, fintech platform loans, and telecom bills, so you can gain a deeper understanding of your creditworthiness.
By following the tips above and demonstrating responsible debt management, you are on the right track to get approved for a loan for your next application.
