You’ve done all your research, picked the loan that you want to apply for, read the terms and conditions, sent through your application and it was declined. You’re probably feeling a bit confused and annoyed right now. So let’s take a look at some of the common reasons why your credit application may have been declined:
1. YOUR CREDIT SCORE IS TOO LOW
Your credit score is a number that summarises the information in your credit file. It’s an indication of your credit worthiness and the lower your score, the more risky it is for a credit provider to lend you money. Now, you don’t need a perfect credit score to get approved but you do want a score over 650 in order to be approved (the highest number a credit score can get to is 1200). You want to make sure you don’t apply for too many credit products in a short space of time and that you don’t have any negative marks (such as a default or judgment) on your file.
If your credit score isn’t up to scratch, we at Repair My Credit Now can help you to erase negative information from your credit file which will make your score go up.
2. YOUR INCOME IS TOO LOW
Many credit applications have a minimum income requirement. Each credit application is different so make sure you double check that your annual income is higher than the minimum otherwise you will not be eligible to apply for the loan.
3. YOU ALREADY HAVE TOO MUCH CREDIT
Just because you earn a six figure salary doesn’t guarantee that you’ll automatically be approved for new credit. A lender will often look at your income, assets, expenses and existing credit commitments when deciding the outcome of your application.
A credit provider must lend you money responsibly. If they believe that you already have too much credit and aren’t in a good financial position to take on any more, they could reject your application.
4. YOU DON’T MEET THE EMPLOYMENT REQUIREMENTS
Credit providers like to see that you have a stable and ongoing employment as this gives some assurance that you can meet the repayments for a new loan. If you are unemployed or if your employment is temporary or casual, you may not be approved.
5. YOU’RE NOT AN AUSTRALIAN CITIZEN OR PERMANENT RESIDENT
Many credit providers have restrictions around who they can supply credit. They often specify that you must be either an Australian citizen or a permanent resident to qualify for a particular loan.
Remember, every credit provider has their own credit assessment criteria and will look at each application on an individual basis. If your application has been declined, get in touch with the credit provider to discuss the reasons why your application was not successful. Or, if you need help managing your debts and getting your finances in order, check out our blogs for a list of resources and initiatives.