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Are banks getting harder to deal with?


A recent news.com.au article suggested that it's getting harder to get a loan approved...and they're right...in some circumstances.

Banks are more cautious than they have been previously and with good reason; people are often less than honest when they apply and this dishonesty can give them a loan that they can't really afford.

Although we are seeing very low interest rates, the lenders are using a higher interest rate to assess an applicant's ability to repay the loan.

The article did have a few suggestions to increase your standing with a lender and I've added a few more:

  • Drop large credit card limits if you can - track your expenses and drop your limits accordingly.

  • Get rid of credit cards that you don't need - lenders can tend to think that you must have a crazy scheme up your sleeve if you have a lot of different credit cards. Ideally restrict yourself to one card.

  • Pay your bills on time - paying your bills late can affect your credit score

  • Personal or unsecured loans - personal debt can make the lenders think that you are living beyond your means. Save hard and pay them off. Come and chat to us if you are saving to clear a debt like this and we can help you plan :)

  • Stay in the job you're in - Lenders need you to be in a job for 6 months and with an employer letter stating that you are not on probation, before they will accept your income as secure.

  • Don't shop around several banks for your loan; use a broker instead - lenders will do a credit check any time that you look like you might be applying (and you may not even know) and doing this multiple times shows up on your credit score. A broker like me knows in advance what lenders are accepting so can avoid multiple applications.

  • Think carefully about fixing interest rates - Locking yourself into a fixed interest rate may not be the best option. Make sure you're across all options or likely outcomes; a broker can help with this too

The article is here.

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