How to Get Approved for Finance

August 1, 2023Financeadmin

Want to pick the brains of a finance broker?

After all, brokers look at thousands of finance applications and regularly get people approved for loans. They also see all the reasons that applications are declined.

So, if you asked a finance broker what their top tips were to get approved, what would they say?

Stop getting short-term loans

Payday loans and wage advance facilities are rife, especially with the cost of living increasing day by day. It seems attractive, to get that $100 to get you through to next pay day or get that $500 to pay your utility bills.

But did you know that having these present, even as enquiries on your credit file, is a knockout with most major lenders? And once they are enquiries on your credit file, they are there for years.

If you need a short-term solution to help with bills or expenses, you are better off contacting the utility provider or creditor directly to discuss payment options. That $100 you take out today can trap you in a cycle of short-term lending that is difficult to get out of.

Pay your bills

It seems simple, but it’s important to make sure that you’re on top of your current loans and bills before applying for more finance. The odd dishonour here or there isn’t the be all and end all, but if you are regularly dishonouring direct debits from your account then it’s probably time to rethink whether you should be applying for more loans.

Apply for finance through a broker

This isn’t a selling tactic. Every time you apply for finance directly with a lender you will likely get a hit on your credit file, which decreases your credit score. If you don’t know who the best lender is for your profile you could apply for several lenders who all decline you. Sometimes even having several recent enquiries on your credit file with the wrong type of lender is enough to knock you out from mainstream lenders.

A broker is a specialist. Their credit check doesn’t affect your credit score, but allows them to get information about your credit nonetheless. They will put your application together and then ascertain your best options and the lenders most likely to offer an approval. They will make sure you’re applying to the best lenders for your profile and will protect your credit score.

Tell the truth

Behind on your rent? Tell us. In arrears on a current loan? Tell us. Was a default on your credit file the result of a bill that was just too expensive? Tell us.

A broker is only as good as the information they have. When they put together an application they make reasonable enquiries into your situation and then put this information together and present it to a lender. If a broker knows information in advance that might be detrimental to your application they can provide suggestions about how to rectify this before it becomes an issue.

A finance application is one situation where it’s not best to act first and then ask for forgiveness later. Be up front with your broker and they are in a better position to help you.

Take an interest in your own finances

You don’t have to be a financial wizard but you should check your own bank accounts on a regular basis. You should be aware of who you owe money to and how much. You should have a basic knowledge of how much you spend on a regular basis for your utility bills. You should know how many bank accounts you have and what you use them for and which account you get paid into.

A good habit to get into is to schedule your debits and upcoming bills on a calendar and then check your accounts daily. Do you have enough to cover upcoming payments? What have you spent money on today? When do you get paid next and how can you manage your remaining funds until that date?

If you have an interest in your own finances you will automatically start to address the issues that regularly prevent people from being approved – too many dishonours, too many current loans, overdrawn accounts, limited fund retention in accounts.