Reason Your Application Could Be Declined: By now, most people are aware that your application can be declined for a number of reasons, including excessive spending, debts, or insufficient income and/or assets.
You may also be aware that blemishes on your credit score like defaults, judgements, and court writs can also be the reason that your loan was declined, but what some don’t know is that there is another reason you may be declined and deemed a high credit risk.
The number of credit enquiries you have made is often the only reason that thousands of applications are being denied by lenders in this current economic state. Many people just aren’t aware of how quickly enquiries can add up, when it becomes an issue, and what to do if it does become a problem.
Even savvy individuals can be caught off-guard by how quickly enquires can add up as a surprising number of ordinary actions can count as a credit enquiry.
These include:
- Upgrading, or getting a new phone. Many parents will buy their children a phone for security, so be sure to get a prepaid plan where possible to avoid applying for credit.
- Car loans, business loans, personal loans, credit cards, and store cards. All can check your credit score too with a directors guarantee or any similar authorization.
- Interest-free accounts will also be recorded on your credit file.
- Your gas, electricity providers, along with other utilities accounts can check your credit.
- Late payments can also be listed on your credit report. Often, one late payment won’t go on your record, but it is best to communicate with your provider and stick to any arrangements. It’s also important to know what the provider will do, and at what stage.
- If you have several large loans or credit facilities, annual reviews can be conducted, which can be placed in your credit file. It is possible for this to occur with each account and can even happen multiple times a year. You can set up an alert through a number of services that will let you know when a change is made to your credit file.
It is easy to see just how quickly enquiries can add up. If an individual has just 2 or 3 enquires over a 6-month period, they could be deemed a bad credit risk to most lenders. This means that if you get a new phone for yourself and one for your child, you may be declined on your next enquiry. Also, shopping around to get the best deal can have a similar effect, since each provider can check your credit file, adding another enquiry to your report.
Applying for a mortgage can also result in multiple enquiries as one check is usually done when the application is initially assessed by the lender or broker, and then again when the loan is ready to be approved. In cases where the loan application extends over a longer period, even more enquiries could be added. You should also be aware that increasing the limit of one of your loans can also add an enquiry.
There is some good news. In many instances, a credit enquiry can be deemed ‘unnecessary’ or ‘unreasonable’. In this case, the enquiries can be completely removed from your file by an expert. It is always best to get these removed, when possible, as even though they may not affect you now, they certainly can.
At Glass Financial, we strive to be transparent and let you know everything the banks won’t mention, and let you know the potential benefits and drawbacks of the various lends, allowing you to make the right choice for you.
Give us a call today on 1300 245 277 or send us an email to [email protected]
