Although a personal loan can be a way to consolidate existing debts, your loan application might be declined if you owe too much. This is determined by looking at the percentage of your income that goes towards paying your existing debt (your debt-to-income ratio) and if you’ll be able to afford the new loan on top of that.
Instability in employment and irregular income
Employment is most people’s main source of income. Lenders may require you to be in a stable job when assessing your income and whether you can meet your monthly loan repayments. If you’ve been changing jobs every few months and can’t prove you have a regular income, your loan application may be declined.
Poor credit history
This could mean two things. Either you don’t have a sufficient credit history, which means lenders are unable to assess your financial conduct, or your credit report is showing existing issues like a poor repayment history.
While there’s no surefire way to get approved for a personal loan. Here are a few tips that could help you increase your chances:
Get a copy of your credit report
Your credit report contains information about your credit history, which is collected from organisations including lenders and courts . It’s available for free every three (3) months through credit reporting bodies such as Equifax, Illion or Experian. It will help you to:
- Be aware of any negatives against your name;
- Check that the report is factually correct;
- Help make plans to improve your ability to obtain credit in the future.
Outstanding debts will typically stay on your file for five or seven years after they have been paid out. Many lenders want to know what actions you’ve taken to address any past repayment difficulties.
Create a budget
Take a look at our budgeting tips. If you can create and stick closely to a budget, you can manage your debts and expenses better and look to build up some savings, which can be a way to show a credit provider you can manage making repayments on any future loans.
Get some help
If you find you’re struggling with debts and feeling stuck, don’t do it alone – get some help. There are free financial counselling services available throughout Australia. Search for someone who can give you good advice here or check out the National Debt Helpline. They have lots of resources that can help you sort out your financial present and future.
Pepper Money personal loans
Use our Pepper Money repayments calculator to find out how much your repayments might be and include them into your budget so you can understand if a personal loan won’t put you under too much financial pressure. Then when you’re ready, you can get your individual interest rate before applying in just a few minutes without affecting your credit score.
A personal loan could be your key to living the real life you dream of. Being financially aware and prepared will put you in the best position for loan approval – and reaching your goals.
Disclaimer: Please read
This article provides you with factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial pop over to these guys or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.