Why your loan application may be refused

Aren’t credit unions here to help people? Why would credit union refuse a loan application? 

Credit unions are ethical not-for profit businesses. We are here for everyone, however we put our members interests first and would never knowingly put someone at financial hardship by lending money.

Loan decisions are made against a criteria that considers affordability, credit history, borrowing history with Advance Credit Union. This includes a free money health check – we will let you know if you should be concerned about your finances.

If we do need to decline a loan application we will always explain why and suggest action you can take to improve your financial situation. There is often financial assistance available for free and borrowing money is not always the best answer. 

There are a number reasons why Advance Credit Union will reject a loan application:

Not enough evidence of income – we need to see that you have enough income to pay the bills as well as loan repayments

Proof of identity and address – fraud and identity theft is all too common and we won’t lend unless we are sure that the loan application has come from you and that you are who you say you are. So we may refuse a loan application if we have not received sufficient ID. See our join page for further information about acceptable ID. 

Outgoings too high to afford loan repayments – if we can see that you are spending too much and won’t be able to afford loan repayments then we will decline the loan application. We also suggest that you review your expenditure and reduce your outgoings where possible, see our page about how to reduce your household expenses. For example ask your gas and electricity provider if you can switch to a cheaper tariff, or change your energy supplier. Free energy efficiency advice from www.energysavingtrust.org.uk could help reduce your energy bills. Weekly meal menus can help to control supermarket bills so you only buy the food you need for the week, and reduce food waste. You should also consider ways to increase your income; could you increase your hours or take a part-time job? Are you claiming all the benefits you are entitled to? The charity www.turn2us.org.uk has a benefits calculator that may help identify benefits you could claim.

Already in debt – if you are already borrowing elsewhere then borrowing more may cause more problems and make things worse for you. Sometimes consolidating those debts at a lower interest rate can help bring things back under control.  

Gambling – Your bank statements may have a high proportion of gambling transactions. Unaffordable gambling can be harmful to family life, relationships, employment, healthy eating and can affect your ability to borrow money. Aquarius is a local charity providing support and guidance on gambling. They can be contacted on 0121 414 0888 or online at aquarius.org.uk/gamblingThe charity Gamcare also operate the Freephone HelpLine 0808 8020 133 or online at www.gamcare.org.uk


Also see our Loan Guidelines which sets out some of the conditions we follow when making a loan decision. 

If you remain unhappy with your loan decision and want more information for the decision then you do have the right to appeal. Just contact us