KNOW THE RULES - Applying for credit
What lenders look for
Each lender uses its own criteria to determine your eligibility for credit. But all lenders gather information about you - and your previous credit experience, from your credit application form plus your ‘credit bureau file’ held with a credit bureau agency such as VEDA Advantage. This file includes credit details such as previous late payments or collection and legal actions (click on ‘What a credit bureau file involves’ in this section to learn more).
As a credit consumer, the main factors to be aware of are the ‘three Cs’ of good credit.
The ‘three Cs’ of good credit:
Client history
How responsible you have been with credit in the past.
Capacity
Your ability to repay the loan based on your income and financial position.
Collateral
This is security for the lender in case you don’t repay the loan. A house, for example, would be used as collateral for a home loan.
Taking care of your ‘three Cs’ will keep your credit bureau file healthy.
How your credit application is assessed
Lenders look at a range of factors when they consider your credit application. These may include:
- Your employment history
- Your monthly income
- Your current expenses (including existing debt repayments such as home loan, personal loans etc)
- Home ownership
- Whether or not you have applied for – or been refused credit, with other lenders.
Read the fine print
Sometimes you may come across an offer for credit that sounds like a good deal. But always read the fine print. Low introductory interest rates – sometimes called ‘honeymoon rates’, may appear attractive, but they often jump to a much higher rate further down the track. Be aware too, of any fees and charges that may apply.
