Loan Refused

Why would a loan be refused

At BCCU we take time to assess each member as an individual and consider each members personal circumstances.

However, there are times we may be unable to lend to a member

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Ability to repay

As a Credit Union, the money we lend out belongs to other members in the Credit Union. Due to this, we have a responsibility to manage our members money and lend it out in an ethical way. This is why we must ensure that when we approve a loan, that the borrower has the capacity and ability to meet the repayments over the entire term of the loan.

Where a member cannot evidence the ability to meet their repayments as well as their other financial obligations, we may be unable to lend on the account.

Poor credit history

As part of the loan assessment process, we will carry out a Credit Check to see an applicant’s Credit history. A member’s credit history is one of the principal factors that we take into account when deciding on loan applications as it shows their affordability and ability to repay outstanding credit

Non-payment of a previous loan

When taking out a loan, a member signs a credit agreement. This is a legal document committing a member to repay the loan with interest. If a member’s financial circumstances change and they are unable to meet the terms of the credit agreement, our highly skilled credit team can assist with making arrangements to help the member. If we are unable to make contact with a member, and we are unable to come to an arrangement. They may lose their credit union membership and all its benefits, including the ability to access future borrowing, until the original loan and outstanding interest is repaid in full. This may involve taking legal proceedings to recover the outstanding debt.

Too much debt

If you have a debt-to-income (DTI) ratio which is over 35%, you may have difficulty finding a loan.

Already in debt

If you already have outstanding credit, borrowing more may cause more problems.

However, sometimes, in the appropriate circumstances, consolidating those debts at a lower interest rate can help bring things back under control.

Gambling 

There is nothing illegal about gambling.  That said, as the advertising urges customers to “please gamble responsibly” this is a key point to bear in mind when applying for a loan. It is not our job to tell you how to live your life, how to spend your money, or indeed to moralise on the ethical rights and wrongs of gambling, however, we do have a duty, under regulations, to lend responsibly. As mentioned above, it is not illegal to gamble so just because you have the odd gambling transaction on your bank statements it doesn’t automatically mean you will be declined for a loan.

However, we will consider whether these transactions are reasonable and responsible. We will particularly look at the frequency of these transactions and the size of the transactions in relation to a member’s income.

Identity and address

Our team need to be able to confirm your identity in line with legislation and regulatory requirements. We may ask you to provide further documentation to assist with this, such as proof of your address, photographic ID or name change documentation.