In general, the bank assesses your borrowing power based on the following:

1. Debt Servicing Rate
2. Personal risk
3. Value of the real estate
4. Loan To Value

Your debt servicing rate is the ratio of your debts and income, which shows your debt capacity. A healthy debt servicing rate is 30% of total income, but usually banks allow 70-80%. In order to get approval on loans, it is advisable to decrease your total debts and increase clean profit, to lower your debt servicing rate.

Besides a low debt servicing rate, banks also check on your credit history to assess your personal risk. Also, a background check will be done.

6 methods to get higher amount of loan

1. Reduce total amount of debt

Try paying off your debts as quickly as possible. This includes all types of bank and non-bank related debts. Bank debts are mortgage, car loans, personal loans and credit cards bills. Non- bank related debt are PTPTN loans.

If you do not pay off your PTPTN loan, you might be included into the CCRIS blacklist. Once your name is found in the list, banks will reject your loan applications.

2. Maintain a good credit history

Banks will use your credit history to determine if you will pay back your loans. The banks usually check credit history through two major systems:
a) Central Credit Reference Information System (CCRIS)
b) Credit Tip-Off System (CTOS)

Credit History Record
CCRIS only displays record for the most recent 12 months. The report contains three types of transactions:
a) Outstanding loans
b) Non-performing loans
c) All loan applications

Those with rejected loan applications should avoid:
a) Late payments
b) More than 1 loans
c) Excessive use of credit card
*You are allowed to print out your CCRIS report for free at the National Bank or write to the National Bank for your report.

CTOS
CTOS records are kept for indefinite amount of time.

The following records in CTOS will affect your loan application:
a) Bankruptcy Information
b) Unresolved legal action
c) Unpaid loans as guarantor
d) Unpaid utilities and telecommunications bills

You should make sure:
a) All personal data are correct
b) All records are up to date and correct
c) There is no legal action against you
d) Business information are updated

If any legal action against you or payment has been resolved but is not updated in the system, please CTOS immediately to update your records.

3. Credit History
If you have no credit records, establish your credit history from now on. Banks are likely to reject your loan application if you have no credit history, since they do not have any basis to assess your ability to repay loans. Such situation is more common among first timers and fresh graduate. Therefore, start by getting a credit card and make sure to pay your credit card bills.

4. Keep credit card balance as low as possible
High balance reflects badly on your money management skill.

5. Have savings
Having a savings account shows that you have sufficient funds to repay debt. This includes all types of fixed deposits, funds and bonds. When submitting your loan application, make sure all your documents are up to date. If you do not provide the necessary information, your loan may still be rejected.

6. Combined income
You can always purchase something together with your spouse as a joint purchase. Combining incomes increases your net income and to reduces the debt ratio, which is beneficial to your loan application. However, both sides should fully understand individual rights under common ownership.


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