How Does Your Credit Affect Personal Loan Applications?

Woman works on her personal loan application

16 Jul How Does Your Credit Affect Personal Loan Applications?

Your credit report takes into account many different factors, from mortgages and personal loans, to credit cards, financing, and bill payments. All these elements combine to form a snapshot of your credit history that affects your future loan applications. Believe it or not, your credit score is one of the most important personal statistics in your life.

Personal loans can be used for a wide variety of purposes, from debt consolidation, to holidays. Your loan will be repaid in fixed amounts over a specified period, based on an interest rate agreed to in the loan terms. The application for your personal loan will be heavily influenced by your credit score. Continue reading to learn how.

How does your credit affect your personal loan application?

When applying for loans NZ wide, you should know that your lender will take into account your credit history when determining the terms of your loan. Your credit report is calculated by three credit reporting agencies in New Zealand: Centrix, Credit Simple, and Ilion. Some lenders have internal policies around minimum credit scores, which are not made public and can change overtime depending on the lenders risk appetite.  Using a good NZ Finance Broker, who understands the various lenders criteria can be a good way of ensuring you maximise your chances of a favourable approval.  Once approved, your credit history will be used to inform the interest rate you will be charged when repaying your loan, as well as your total borrowing limit for the loan.

Why are credit scores important?

Your credit score could be the difference between an approval or a rejection of your personal loan application. It can also result in hundreds, even thousands of dollars in savings in interest rates for an approved loan. Depending on the size of your personal loan, even an increase of a few percent on your interest rate can have a snowball effect that adds significant time and cost to your loan terms.

What can you do to improve the outcome of your personal loan application?

Clearly, it pays to ensure that you have a good credit history when applying for a personal loan. You should always request a free credit report before applying for your loan to see where you stand and make a more informed estimation of what your loan will cost you. This will also give you the chance to spot any mistakes or inaccuracies in your credit report, and have them corrected before they negatively impact your loan application.

If you do have bad credit however, you are not without options. Bad credit loans are available to help you improve your credit report before it’s necessary for a major investment. If your credit history has been negatively affected by a few unpaid bills or a single default (a bill unpaid for more than 60 days), you can use a bad credit loan to give your credit score a boost. Additionally, information on your credit report is only valid for five years. This means that if your financial difficulties occurred five years ago, they will eventually vanish from your credit report, improving your score.

Don’t let your credit history come between you and your financial future

 

Don’t let a bad credit history prevent you from realising your dreams. If you need a personal loan, Max Loans will work with you to make it happen. Our team of expert loan advisers will craft a plan that’s right for you, with loan terms ranging from 6 months to 7 years, and interest rates ranging from 9.95% to 29.95%. Everyone deserves a second chance. Contact Max Loans today to claim yours.

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This publication should not be deemed as financial advice. While all care has been taken in the preparation of this publication by the writer, Max Loans and the writer give no warranty as to the accuracy of this publication and whether the information contained within it is appropriate for your individual circumstances. No responsibility is taken by Max Loans or the writer for any errors or omissions in this publication. You should seek specific financial advice appropriate to your individual circumstances before acquiring or disposing a financial product.