You might have a great credit score but…
If you are…
At your credit card / overdraft limits
Spending a significant proportion of your monthly income on credit repayments OR Your debts are high compared to your annual income
… then you are likely to be refused a loan.
Lenders think that credit should be used to manage peaks and troughs in expenditure. For example, Christmas or the kids returning to school. Or to buy big ticket purchases like holidays, cars and homes.
Consequently, if you are at your credit card limits this may give a creditor the impression that you are using the cards to live beyond your means. Furthermore, if lenders suspect you’re using credit to pay for day-to-day living expenses, you’ll probably be declined.
Some lenders work on the basis that if you are above 50% of your credit card limits a loan application will be declined.
Just making minimum payments? That’s not a good sign either.
Some creditors will have access to your credit card and overdraft balances over time. Should these be increasing, it may be a decline. Cash withdrawals on a credit card often means ‘No’.
Constantly hovering at your overdraft limit will not go down well either.