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Loan application tips

Applying for loans and getting rejected can be disappointing and may negatively affect your credit score, especially if it happens more than once.

While it’s not the end of the world if you’re rejected a few times, it’s good to get your application right the first time round.

It will also save you the time and hassle of having to redo your application.

Here are 6 tips for a successful loan application.

Build and improve your credit score

Your credit score is used by banks and other loan providers to assess how well you’ll be able to manage your debt.

You can build and improve your credit score by paying bills on time and keeping up with your debt repayments.

This gives lenders confidence that you’d be able to keep up with your repayments if they offered you a loan. Any late or missed payments can negatively impact your credit score and limit your ability to access finance.

Work out what you can afford to borrow

Lenders will do an 'affordability check' when they receive your loan application to make sure you can afford the repayments.

They may look at your income and outgoings, and any financial commitments you already have.

Creating a budget can help you see how much money you have left over each month. You'll be able to see if you can comfortably afford to make the monthly repayments for the loan, and it may help you avoid borrowing more than you can afford to repay.

Check your credit report

Your credit report contains your credit score and the history of your credit profile.  

If there are errors on your credit report, it could be negatively affecting your score, so it’s worth going through it with a fine tooth comb.

You can check your credit report and score on the AECB website for a small fee. Requesting your Credit Bureau Report may impact your credit score.

From your personal details like your name and date of birth to your outstanding liabilities or payment history, double check all the information the AECB holds for you.

If you spot any errors, you'll need to complete the Data Correction Request form on the AECB website.

Make sure you meet the eligibility criteria

You'll need to meet certain conditions when applying for a loan, such as minimum income requirements. These requirements can vary between loan products and lenders.

Check the terms and conditions of a loan before applying to avoid your application being rejected if you don't meet the eligibility criteria. 

Double check your loan application

Even just a small mistake on your loan application can lead to it being rejected, because your application details simply won’t add up to what’s on your credit report.

Make sure you set aside a good amount of time to complete your loan application, and try to keep distractions to a minimum.

Be vigilant with your address history in particular – details like your flat number, house number, and road name all need to be in the correct format.

Take your time when applying for a loan to make sure all your details are correct.

Don’t over-apply

Too much of anything can be a bad thing, and it’s the same for loan applications and your credit score.

If you’re applying for loan after loan, it could negatively affect your score, and banks could see it as a red flag on your credit report.

It suggests you’re not able to manage your money effectively and you’re reliant on the loan you’re applying for, which doesn’t bode well for your ability to repay it.

Do your own research to make sure a particular loan is right for you before applying.

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