Why wasn't my loan application approved?
Firstly, we would love to be able to approve your loan, but there are times when we are simply unable to. When looking to approve a loan, we consider a lot of information including affordability (can you comfortably afford the repayments), your credit history, and other things like occupancy, employment (if working) as well as your repayment history on other loans.
Sometimes, we even offer a ‘conditional’ approval - but then, once we have made a final assessment, we may determine that our loan is not in your best interests.
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. We do accept some bad credit, but it will be considered with all the other aspects of your application.
- Affordability — after reviewing your income and your expenses, 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?
First, stop and consider whether taking out another loan, is your best option. A small loan can be a great fix to small and urgent money problems, but often won't fix the bigger picture if you are already struggling.
- 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.
- 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.
What other options are available to me?
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.