When you’re applying for a loan, or any finance whether it’s for a small van or large truck, it’s important to know how the finance industry operates.
It’s clearly very important to the finance company that you are able to service, i.e. repay the loan, so they make extensive investigations into your credit history before they approve any loan.
They’re normally looking for any history of not paying bills or repayments on time. However, credit checks also take into account a huge range of other factors, from what income you have through to the assets you own, and whether you’re renting or paying off a mortgage.
But there’s one other factor a lot of people are missing which can negatively impact your ability to get a loan; When you’ve put multiple finance applications into different finance companies in a relatively short period.
At Aussie Truck Loans, we speak to a lot of people looking to arrange finance and many are not aware that the process of shopping around by putting in multiple applications will impact their creditworthiness. Unfortunately this can be regarded by the finance industry as ‘over shopping’ and increases the possibility that you’ll be wrongly identified as a likely default risk. People putting in multiple credit applications, even if they do not end up accepting the credit offer, can be considered to be less creditworthy and research, In fact, shows they are more likely to default.
Even if the result is not an outright credit rejection, you can still end up paying a higher interest rate or having to go to a special ‘non-conforming’ lender where you’ll pay a higher interest rate anyway.
If you want to make sure you’re getting the best rate without being caught in the ‘busy recent credit history’ trap, the best thing to do is talk to a broker (like us!), so we can advise you on your options and then put in the one application for the best credit deal for you, instead of multiple applications.
If you do find yourself classified as a having a busy recent credit history, there is only one thing you can do – wait. Depending on the sort of finance you’re looking for this can be anything from three to six months, or even longer.
To summarise…
- Every application for finance leaves an impression on an applicant’s credit history
- Multiple applications in a short period can impact the applicant’s credit worthiness
- Financiers and banks do not look kindly on applicants with a ‘busy recent credit history’
- The implications can include receiving a higher interest rate, having to use a non-conforming lender or being declined.
- Time is the only thing that can resolve these issues for an applicant with a busy credit history
- Best to talk with a broker like Aussie Truck Loans