Does having debt reduce your chances of getting a loan?

Emma199

Hi everyone,

I just want to know:

Does having other loans (credit cards) reduce your chance of being approved for other loans - even if you keep up with your repayments?

Thank you for any replies!

Apples2

Of course.

They will compare your income to your level of debt. the chances of acceptance reduce and the APR offered will increase if you have a lot of debt to service already.

Emma199

Okay, thank you!

StuC75

Its a fine balancing act - and comes down to how well you manage things..

No Credit - would be difficult to prove your credit worthiness as no 'Track Record'.

Whereas Too Much Credit utilized - e.g. Credit card always maxed out / minimum payments only covered ... would ring warning bells..

Whereas balances always cleared in full - and not such a high level always utilised.. Looks better..

E.g. I put monthly Shopping \ Petrol & Spending on a Credit Card which is paid in full each month (Never 1p interest charged). Use a second card for balance transfer offers (only paying the handling fee each time) which the last round of spending on was cleared earlier in the month.. This week had no problem when applying for a significant personal loan at tesco..

jason1231972

Debt, in itself, is not necessarily a barrier to further credit.

But, how this debt impacts upon your affordability, and how well (or not) you've managed the debt in question are both significant factors in lenders' decisions.