Applying for a Loan

Lending institutions typically offer a range of options for applying for a loan, including:

• at their branch
• over the telephone
• online through their web site
• via a written application

When assessing your application, the lender or an intermediary will look at your income and financial commitments and assess the level of risk associated with you repaying the loan. Your past credit history is considered, including any adverse credit such as mortgage arrears or defaults.

Lenders generally use credit scoring facilities and Credit Reference Agencies to assess your suitability. Credit scoring assesses your personal circumstances and statistics to determine which broad category of borrower you fit in to. Credit reference agencies (such as Experian, Equifax and Trans Union) provide a detailed analysis of your financial position as they hold information known as your Credit Report, which details your credit history, any adverse credit and any existing commitments. (See Living with Credit Safely for more details on Your Credit Report and how it is compiled).

After your application has been processed, you are provided with the decision. Since criteria and credit scoring varies between different lenders, being refused credit by one lender is not necessarily an indication that a loan application will not be accepted by other lenders. You should note however that your Credit File includes all instances of being refused credit.

If you have been denied a loan, then the lender must give you details of the credit agency they have used. You may request a free credit report each time you are denied credit because of your credit history. If you discover any inaccuracies in your credit report, you should notify all three major companies and supply them with the correct information.