Loans Singapore

Personal Loan 101: How to Qualify

One of the important steps in the loan approval process is pre-qualifying for a personal loan. This will provide the lenders with preview of your financial status and creditworthiness. Furthermore, this will give you an idea of the amount of loan that you can receive. However, getting pre-qualified does not automatically guarantee the loan approval.

In general, pre-qualification will involve various steps. You will have to fill out an application form where you will share your information such as your existing debt, occupation, and income. Next, the lending company will perform a soft credit check. They will assess your credit history and credit score. This will provide the lenders an idea of how risky a borrower you are.

In your pre-qualification, the lenders can either deny or grant your application. If you pre-qualify, you will receive information about the loan that you can borrow. This will include the loan rate and the loan amount.

In the pre-qualified offer, you can either decline or accept it. If you accept it, then you can now formally apply for a personal loan. This will involve additional information and assessment.

In this article, we will learn about how lenders qualify you for a personal loan.

Determining the Non-Credit Factors


Lending companies also gather the non-credit factors to assess your eligibility and suitability for the loan. In Singapore, you must be at least 21 years old to apply for a personal loan. Indeed, your age will not directly affect your personal loan terms and rates. However, some credit and non-credit factors are closely related to your age.

For example, younger borrowers are unlikely to have income versus older borrowers, those with long employment histories, or those with good and long records of timely payments.


Next, apart from age, location is another non-credit factor to consider. Not all financial institutions lend nationwide. Credit unions and traditional banks will only issue personal loans Singapore where their physical branches are located. They usually provide information on their websites. Peer-to-peer and online-only lenders can have geographical restrictions too.


Lenders can also factor in liquid and non-liquid assets that you have in determining eligibility. Borrowers with a good amount of liquid reserves are less likely to default with their payments. Traditional bank lenders would sometimes require borrowers to have proof of liquidity before they approve the personal loans Singapore.


Not all lending companies would require their borrowers to meet minimum education standards. These standards are required for education-related loans. Examples are student debt refinancing products. Here, the borrower’s ability to pay will depend upon the borrower’s future employment and income.

Lending companies with education standards will require borrowers to have at least a bachelor’s degree. For specialized loan types, they will require the borrowers to be professional or post-graduate degree holders.

Employment and Income

Lending companies will require you to have a regular and stable income from your employer or from the government benefits. You can also declare your other sources of income during your application. Examples would be child support and alimony. However, this is not required by the law.

If your income is based on your self-employment, then you might struggle in qualifying for personal loans with good terms and rates. Depending on the policy of the lender, you might need to demonstrate that you are earning a good income for at least 12 months. The same standards apply to formally incorporated business borrowers.

Information During the Qualification Process

Indeed, rates and terms vary among lenders. As such, it is best to qualify for multiple personal loans so you can compare the offers. When you pre-qualify, you can have access to potential loan terms. This will provide you with the amount that you qualify for plus the interest rates. However, these numbers might change after the lender can have access to your finances after you apply.

Pre-Qualification on Your Credit Score

If you are pre-qualifying for your personal loan, it will not affect your credit score. Lending companies will have a soft credit check to you. This will determine your creditworthiness. However, this inquiry will not be visible on your credit report. With this, you can pre-qualify with different lenders and select the cheapest and best loan option that you can have.

If you continue with the loan application, the lender will check your financial history. It will also do a hard credit check that will appear on your credit report for up to two years.


In sum, personal loans are offered with fixed monthly payments, fixed repayment terms, and fixed interest rates. Sometimes, they can come with high-interest rates and fees especially for those whose credit score is not good.

As such, see to it that you get your credit in good shape first. Do this before applying if you wish to have a loan with the best rates and terms. Similar to other financial products in the market, make sure to compare the offers from different lenders before you decide.

If you are finding for a quick personal loan, discover how you can qualify for an instant personal loan here.

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