It can be very disappointing when a lender says “no” to your loan application, however it is important to understand why your application has been rejected and take steps to prevent it from happening again.
Why do credit providers reject loans?
There are a number or reasons your loan may have been rejected, including:- You have defaults on your credit report (overdue payments of 60 days or more where debt collection activity has started)
- Your credit report includes missed repayments to a credit provider (such as a bank) that are more than 14 days past the due date
- After considering your income and your existing debts, the credit provider thinks you may struggle to make the loan repayments
- You do not have enough money saved in your bank account to prove that you can make the loan repayments
The law states that your credit provider must lend you money responsibly. This means that they must not lend you money if they think the credit is unsuitable for you. If your loan application has been rejected, it is possible that the credit provider decided that the credit was not right for you and you would not be able to keep up with the repayments.
What can I do to improve my chances on my next loan application?
- Get a copy of your credit report
You have the right to find out what’s in your credit report and correct any wrong information. You can receive a free copy once a year if you can wait 10 days from the date you request it. If you need a credit report sooner, or if you want more than one copy in a year, you may have to pay. - Reduce your debts
This article explains ways you can reduce your debt: https://www.hunterlending.com.au/blog/dealing-with-debt/ - Create a budget
If you stick closely to your budget you can build up some savings to show the credit provider that you can make repayments on any future loans. For more information on creating a budget visit https://greentreefinancial.com.au/budgeting-know-your-cash-flow/. - Reorganise your debts
Consider consolidating and refinancing any debts you may have. - Seek help
If you are struggling with debts you should seek help from a financial advisor.
Getting your finances back on track will give you confidence when you next apply for a loan.
Need help? Contact us at Hunter Lending Solutions to arrange a confidential chat.
Source: https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/loan-rejection