Loans
Australia

What the Banks don't tell you

How do Lenders decide whether to say Yes or No to an application for a loan?

While each lender applies a different importance to each of the 6 'C', they all use them in deciding whether to approve the Loan or not.

The 6 'C' of Credit Assessment are:

 1/  Capital

• What is the Customers Asset Position?
• Do they own their home, or have substantial equity in it?
• Do they own, or have equity in other real estate?
• Do they own, or have equity in Vehicles, Bikes, Boats etc.?
• Do they have Savings, or Investments?
• Do they have Home Contents, and is it Insured?

 2/  Capacity

• Can the Customer Afford to make the Repayments?
• Does the percentage of expences to income meet the Lenders Guidelines?

 3/  Credit

• What does the Customers Credit File look like?
• Are there any defaults? Especially with regards to other loans.
• Were previous loans at the same repayment level?
• Do the details on the application match the Credit File? Has False Information been given?

 4/  Collateral

• What is the Security Like?
• What is the Loan to Security Ratio?

 5/  Character

• How stable is the Customers home life? Have they moved around a lot?
• How stable is their work life? have they had many different jobs and employers?
• How many enquiries on their Credit File? Are they Credit Shopping?
• Have the other applications for loans been approved or declined?

 6/  Conditions

• Are their outside factors?
• Is their employer filling for bankruptcy?
• Is there a Police Warrant out for the Customer?
• Has the Customer been flagged as a security risk?

Understanding your strengths and weaknesses will help you successfuly apply for the loan you are seeking.

It is critical that you complete an application for a loan completely and accurately. Do not put false or incomplete information in your application, hoping to make it 'look better'. Lenders have many ways to check, and if they find discrepancies in your application they will automatically decline your application and make a note on the file that mis information was supplied.

It is also very important you know exactly what is on your Credit File, and make sure that your applications details match it.

Get Your Credit File and Report