Why wasn't my loan application approved?
As a credit provider, when looking to approve a loan, we consider a lot of information including affordability (can you comfortably afford the repayments), your credit history (some bad credit is considered) and other things like occupancy, employment (if working) as well as your repayment history on other loans or credit.
For new clients (never had a loan with us before), you need to be working. You can also receive Centrelink benefits, but your total income needs to be at least $500/week. We are unable to accept an application if you are only receiving Centrelink benefits.
We may initially offer a ‘conditional’ approval, then once all the paperwork has been received and a final assessment completed, we may determine that our loan is not in the best interests of an applicant.
There are a number of reasons why we are unable to approve a loan. Some of the most common reasons are:
- Defaults on your credit report — we refer to your credit report when you apply for a loan. Your credit report details your credit history including every time you have applied for credit or defaulted on a repayment.
- Affordability — after considering your income and your existing debts, if we think you may struggle to meet your loan repayments, we are unable to approve your loan.
- Suitability — if, based on your circumstances (including your current financial situation and the loan purpose you applied for) we feel a small loan may not be suitable for you, we are unable to approve your loan.
- Responsible lending — by law we are bound by responsible lending provisions which means we will not lend you money if we think you are going to struggle to meet the repayments or we think the credit is unsuitable for you. We need to make sure the loan suits your requirements and objectives.
- Potential risk of default — as a credit provider we also have a responsibility to manage our own risk profile. If, based on the information provided in your application we feel there is a potential risk of default under the terms of your loan agreement, we are unable to approve your loan.
Although we assist thousands of Australians every year with both good and bad credit, unfortunately we are not able to help everyone.
What can I do to improve my next loan application?
If your loan was unsuccessful, there are some things you can do to improve your situation before you apply for another loan:
- Get a copy of your credit report — a poor credit report could affect any loans or credit you apply for in the future, so it is important to make sure the information is correct. You have the right to find out what is in your credit report and correct any wrong information. To find out more about your credit report visit www.mycreditfile.com.au.
- Reduce your debts — keep up your repayments on existing debt or make extra repayments so you can repay your debt(s) faster.
- Create a budget — there’s no doubt about it – if you set a budget for your household expenses and stick to it, you will save money. If you get into the habit of recording your spending, you’re on the way to getting in control of your money. And if you stick closely to your budget you can build up savings to show credit providers that you can make repayments on any future loans.
- Reorganise your debts — there are a number of community organisations, community legal centres and some government agencies that offer financial counselling as a free service to help you sort out your money problems.
Other useful links
Savings goal calculator — work out how long it will take to reach your savings targets.
Budget planner — work out your current spending and how much you can afford in repayments.
Credit card calculator — work out how long it will take to pay off your credit card.