This process looks at what interest rate to offer you, how much it will cost you over different pay-back periods, and whether you can afford this.
Credit providers want to be comfortable that the credit they grant will be paid back on time and in full. Therefore, they conduct a credit risk assessment to evaluate potential borrowers. Download our free Good for Credit booklet for more information.
This is the amount you can afford to repay per month.
Credit providers look at the money you have left after all deductions and expenses to evaluate how much you can afford to pay on a new loan. Information on how reliable you were in paying your previous and/or existing loans will also be used to help determine whether you pay your loans on time. To them, this is an indication of how you will repay the new loan.
How stable your employment (permanent employment as opposed to being a contract employee) is, will affect the amount of credit you qualify for. Credit providers will also look at how long you have worked at your current employer and in some cases require proof of employment.
This shows the risk you pose to credit providers.
Your willingness to pay back outstanding credit affects credit providers’ decision to lend you money. By getting your credit profile from the credit bureau, they can see if you have been a good credit client with your other loans. This will show them how much of a risk you are to them should they give you a loan. The lower the risk you pose, the higher your chances of getting approved for credit.
Credit providers will check your payment history on previous loans to see if you paid your instalments on time, every time. Only when they are happy that you will pay back the loan as per your agreement, will they make you a credit offer.
Credit providers will review these areas of your financial position before granting credit so they’re comfortable that the money they borrow you will be paid back on time and in full. Save time by reviewing this in advance.
