Hi guys,
Just a quick question.
Does lenders need to give reasons for loan rejection?
Any related legislation ?
Thanks
Do Lenders Need to Give Reasons for Loan Rejection?
Comments
What if I does not like it?
Go to a different lender and then another one until your credit score is shredded by loan application rejections.
Eat potato, find potato iz rock, much malnourish, die of starvation, suffering finally end.
meets the requirements of Section 21P(2) of the Privacy Act including stating that the refusal is based wholly or partly on credit eligibility information and which CRB provided it;
So they'd not required to tell you the exact reason eg. Expenses or not enough history or employment status? They only need to say if it's wholly or partially due to crb.
If it’s not credit reporting related then no explanation required. If it’s due to something in your credit report then they need to let you know that it’s due, or partly due, to information contained in the credit report. What exact information? They don’t need to say but at least you know it’s something in the credit report
That reference is nearly 10 years old.
Yes, current legislation can be older than 10 years. Who would have thought?
You can ask but they may be answer
Got rejected because I identified as loansexual :(
lonesexual
ftfy
Not sure if they do or do not, but typically they would tell you why, and typically it be because they think you cannot service the loan.
A lender may reject your loan application for one of these reasons:
There are defaults listed on your credit report — that is, overdue payments of 60 days or more where debt collection has started.
Your credit report lists repayments that are more than 14 days overdue.
After considering your income, expenses and debts, the lender thinks you may struggle to make the repayments.
You don't have enough income and savings to show you can pay off the loan.
Well
Just reading the tea leaves it would be one of the following
loan amount is too high
your income doesn't meet the necessary stress tests required for the loan
your repayments will be >30% of your weekly income - no room left for increases in interest rates
Your spending is too highLenders want to give you money.
They don't want to own a property at the end of the day though and foreclose on it.
They don't want to own a property at the end of the day though and foreclose on it.
This. And as an extension to this statement, this is why for many reasons, lenders don't want to be involved in foreclosures and they are only ever the final step in a very long journey if it gets to that.
CBA rejects StepPay and then blasts me with a 17% interest package without consent!
They didnt in 1988 for an RZ500 in a crate.. dunno why they would now
They do not need to give a reason and generally they do not. There is no legislation that says they must give a reason
'Computer says no'
I've had a credit card application rejected. No reason given. Another got approved.
Negative
Generally there is no obligation to tell the applicant why the loan application was declined, except where the loan has been declined due to information in the credit report.
https://www.alrc.gov.au/publication/for-your-information-aus…
“Credit providers also have notification obligations when they use a credit report to refuse an application for credit. Where a credit provider refuses an application for credit, and this refusal relates partly or wholly to information in an individual’s credit report, the credit provider must: notify the individual of these facts and of the individual’s right to access his or her credit report; and provide the name and address of the relevant credit reporting agency.”
If you have been declined and have not been provided with this notification then the most common reasons for being declined would be not meeting serviceability, not meeting the internal credit score, or having a number of other risk factors which when combined mean you’re not within the risk appetite of the bank.
I worked in this area of banking previously.
The broker or officer punches in your details into the computer. The computer uses the information you provided plus your credit file plus any other data the bank may have on you plus a myriad of external data to churn out Yes or No.
Most staff do not know why its a No. Most staff intentionally are not told how the algorithm works to prevent gaming the system. They are trained to accept the computer decision and say nothing else.
Some savvier staff can make educated guesses as to why but do not actually know the real reason.
I worked in an optus call centre and we used to tell people they 'Do not meet Optus requirements', and leave it at that…. we were often not allowed to say why. Two exceptions, if they were under aged or if it was a failed credit check we could tell them there was a credit history problem, but not specifically what it was we saw there. Anything else we couldn't disclose because some reasons weren't legal/ reasonable/fair imho (!!!). For example, if we saw on their credit record that another Telecom provider had refused to give them a phone in the past x months that was enough for us to reject as well!
Maybe things are different now…
They does not