What do Banks Really Look for in Your Loan Application?

Need a loan? Then you might be curious about what lending banks are concerned with when considering your application.

It’s never easy to get rejected when it comes to love or job applications, and loan applications are no different. You’ll be waiting, hoping, and praying that your loan comes through and if it doesn’t, cue the crushing blows.

To reduce your chances of being a loan-reject, your application needs to be a solid one. But how exactly do banks measure your financial status? What do they look for when it comes to approving loans? Here are the three main areas that prospective lenders will focus on when reviewing financing applications:

Annual Income and Type of Employment

The amount of money you earn in comparison to the debt you have indicates your loan repayment ability, but it is also tied to several areas of your employment. Thus, your earnings are not the only point of contention as stability of income is also crucial to your application. as well.

Therefore, even if you are making mad money as a freelancer or a sole-proprietor, when compared to a permanent employee with a fixed monthly salary, you’re likely to appear as the higher-risk applicant.

In addition, the high status of the company you work for i.e. MNC or public-listed firm could help bolster your application, whereas a newly-incorporated sole-proprietor may not hold as much sway.

Savings and Other Assets

Having a healthy reserve in savings accounts and fixed deposits or owning other assets like property, stocks and bonds indicate that you have the means to repay your prospective lenders. This holds true regardless whether you are applying for an Al Rajhi personal loan or a HSBC Amanah personal loan.

Furthermore, if your accounts are tied with the bank you intend to borrow from, you might just have a leg up in securing a loan. Your application could be deemed as less risky because of their ‘right to set off’ your dues from the savings accounts (and other assets) you hold with them. Therefore, if you already have an account with, say, CIMB Bank, your chances of being approved for a CIMB Bank personal loan may be higher.

Credit History

While this is an obvious one, you might not be familiar with the exact aspects of your credit history the banks are concerned with. Did you know that being blacklisted by a utility company or leaving multiple savings accounts dormant could have an effect on your loan application?

It certainly can and while these very common infractions may not even ring a bell to you, it could be listed by credit reporting agencies and raise red flags on your report.

This is why it’s necessary view your credit report before making any loan application so you can clear off your remaining debt as well as dispute false complaints that might have been made against you.

Bonus Tip: If your credit history is a little shoddy and time isn’t on your side to improve your status, do check out our article on ways to get financing even with bad credit.

Apart from these factors, banks may also look at a borrower’s status, as in their age, professional qualifications, titles held, community ties and the like.

More Things You Can Do To Get Your Loan Approved

Support your application with these handy tips:

1. Get a Guarantor

A parent or spouse with good credit standing can improve your application and perhaps even secure better loan terms. You might also consider a solid reference from your employer to give you a leg up for your application. If you’re running your own business, try to get a recommendation letter from reputable creditors who are willing to help you..

2. Choose Your Lenders Carefully

Apply to at least one bank with which you have a good relationship i.e. one that you have actively maintained an account with or promptly repaid any credit issued or loan undertaken in the past. Not being a stranger can be beneficial especially if the prior conduct was positive.

3. Time Your Application

Avoid making numerous loan applications at the same time as it might indicate desperation for funds and could raise unwanted red flags on your credit report. If your loan has been rejected by more than one bank, wait at least a year before you reapply. Also, a good planning can give you time to gather assets and clear your credit history before you start reapplying.

Bonus Tip: The simple truth is that banks have different metrics for evaluating loan applicants, so if you’ve been turned down by one prospective lender – chin up, because another might approve your loan!

If you are looking at financing for a house, car or other personal ventures – be sure to first research on loan packages to get the most favourable rates, terms, and conditions on our comparison pages.


Agree or disagree with this post? Questions? You also have your word!

  • Isham bin yusof

    Tolong jelaskan dalam bahas melayu

    • Solomon kalop anak nyantau

      Tolong jelaskan dalam Bahasa melayu

      • RinggitPlus

        Hai Isham dan Solomon,

        Secara ringkasnya ada 3 benda yang bank akan perhatikan: Pendapatan tahunan dan jenis pekerjaan, simpanan bank dan aset, dengan rekod kredit.

        Kalau pendapatan tahunan lebih tinggi daripada bayaran pinjaman bulanan (contoh: bayar balik pinjaman RM500 sebulan, gaji bulanan RM3000) dan jenis pekerjaan stabil (contoh: kerja dengan syarikat ternama atau kerja kerajaan dan bukan bisnes sendiri atau bisnes baru) bank akan lebih sedia untuk beri pinjaman.

        Kalau ada akaun simpanan dengan bank yang sama, atau ada buat pinjaman lain dengan bank dan kadar bayar balik adalah bagus, juga bank akan lebih sedia untuk beri lagi pinjaman.

        Ketiga, kalau ada rekod kredit yang sihat. Maknanya kalau bila bank rujuk sejarah pinjaman, peminjam jelas selalu bayar cukup dan tepat pada masa, bank akan lebih sedia untuk beri pinjaman.

        Harap jawapan ni membantu!

    • S DEVA RAJ

      im agree

      • Elinsy


        • Leo

          Hi there.

          Here is my situation:

          It is frustrating to say the least that every attempts of me trying to have my loan application approved, have failed. Every single time. Whether it is for a car loan or a personal loan, I ended up getting rejected (even worse than my past crushes' rejections). And for 5 years straight, I walk or even use public transport to go to work - which is frustrating. Walking under the hot weather at the roadside while looking at drivers drive comfortably in their cars with their music blaring and aircon blowing off the heat, God I wish I am in one of those cars.

          I realized that it was (partially) my fault that I was not consistent in paying up my student loans (yeah, PTPTN was listed in CCRIS). Only in recent months do I get my payments on time. Hell, I paid up early every month. After that, I would log in to my CCRIS account. The zero arrears gave me some relief - and I went on to try my luck again. Besides, PTPTN is the ONLY loan I have! No other loans. Not even using a credit card!

          I applied for personal loans from AEON and Maybank. I planned to borrow RM5k, more than enough to buy me a used car and the leftovers will be repaid. My usual documents - my IC, 6 months payslip and my EPF statement. The reason why I did not include the bank statement is because my current employer decided to be old school - to give the employees' salaries in cash. I thought that was not a big deal, until a colleague told me that it really is hard to apply for ANY kind of loans because the salary is not credited to the bank.

          So I applied, and waited.....

          Is it possible that my loan applications is rejected because my salary is not credited to my personal bank account? Or do I have to wait until a certain period of time, constantly paying off my loans every month, then the banks would approve it?

          • RinggitPlus


            Your situation is a frustrating and complicated one to solve. Based on what we gather from your situation, it seems that you do not have a salary slip or checks to show how much you are earning. This is not to say that you are automatically rejected by all the banks, rather the banks need some form of documentation to show your income.

            As such, it is in your best interest to contact the bank to inquire about the situation.

            Thanks for the question and we hope this help.

          • wan

            hi there,

            im gonna write in bahasa Malaysia if you dont mind, okay let me start,

            saya ada seorang rakan yang bekerja sebagai grab driver. beberapa kali sudah rakan saya ini memohon pinjaman peribadi, tetapi masih di tolak atas alasan dokumen tidak cukup dan pekerjaan yang agak berisiko.

            saya ingin bertanya jika pihak tuan boleh menjawab, adakah masih ada bank yang menyediakan pinjaman peribadi untuk grab driver sedangakan mereka ini agak kaya juga (dalam masa beberapa bulan sahaja mereka mendapat 5 angka). mereka memohon pinjaman peribadi pun untuk menyelesaikan masalah mereka dengan cepat dan ada yang mahu membeli rumah idaman mereka dengan kadar segera sebelum rumah itu naik harganya, cuma depositnya belum cukup lagi.

            sekian terima kasih.

            • RinggitPlus

              Hi, wan

              Kami faham situasi rakan anda yang hendak memohon pinjaman peribadi. Rakan anda boleh merujuk kepada laman web kami https://ringgitplus.com/en/personal-loan/ untuk mencari pinjaman peribadi yang sesuai. Tetapi, pelulusan permohonan akan ditentu oleh pihak bank.

              Terima kasih dan kami harap jawapan ini boleh membantu anda.

            • jay

              how can a grab driver get a car loan.

              • Danny

                Hi, please advise upon submission of salary slip and account statement, understood the bank will contact my employer to verify upon employment, and the account statement are for reference only ? Or the bank will also get in touch with my bank for verification ? Do they have access to my other info without my consent ? Thanks

                • Tyrion

                  Hi there, does it affect your loan application if your employer is not consistent in paying your Epf?

                  Meanwhile, you have good credit, consistent salary pay and payslip.