Refinancing loan rejected by Athena

ledzep on 07/02/2020 - 09:09

Ok, so applied to refinance my loan with Athena and got rejected due to credit score for whatever reason.

My partners is great and mine is ok to good. It was good enough to get a car loan 12 months ago as well as a new credit card in 2019 and nothing else has changed financially.

Basically just want to consolidate some external debt we have onto the loan (did a holiday and paid for renovations so got a HSBC and ge creditline to pay them off)

Is there another lender not as strict as these guys worth applying for?

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Comments

  • HighAndDry on 07/02/2020 - 09:23
    +16

    It was good enough to get a car loan 12 months ago as well as a new credit card in 2019 and nothing else has changed financially.

    Other than now having an extra car loan and a credit card…

    • ledzep on 07/02/2020 - 09:26
      -6

      Well yeah but why would I be approved for these if my credit rating is bad?

      Which for the record I just had a report done, two actually, and my credit rating is good. My wife’s is excellent

      Our home is worth more than our loan and really this is about consolidating some extra debt we accumulated the last 12 months or so.

      • HighAndDry on 07/02/2020 - 09:27
        +6

        So, new car loan, new credit card, and some extra debt, and you wonder why it might be harder to borrow money?

        • ledzep on 07/02/2020 - 09:29
          +2

          is a combined income for $200k a risk to lenders these days? I know circumstances can change for people, however, pretty stable in my job of 5 years in an industry that doesn’t change much

          Would’ve thought lenders would look at home value, current loan and external debt and see that we are trying to consolidate it all together in one loan.

          • HighAndDry on 07/02/2020 - 09:37
            +35

            @ledzep: They look at loan servicing ability - income less stable/recurrent expenses (roughly, don't quote me).

            The fact that on a $200k combined income you still couldn't save and needed to take out loans for discretionary expenses suggests to me that you earn a lot but also spend a lot too.

            That would go against you in loan applications.

    • stirlo on 07/02/2020 - 11:03
      +5

      Did a holiday and paid for renovations so got a HSBC and ge creditline to pay them off

      And the other 2 loans with HSBC and GE…

      • MrBear on 08/02/2020 - 16:23
        +1

        Who takes out a loan to go on holidays? Wow. And on a combined income of $200K.

  • wiipantz on 07/02/2020 - 09:25
    +2

    You have a lot of debt and applied for a lot of debt in particular recent debt, hence you got rejected. Your score may not have updated yet on your side but the lenders can see your recent applications.

  • JIMB0 on 07/02/2020 - 09:30
    +1

    I wouldn't lend you $5.

  • Eyetie on 07/02/2020 - 09:37
    +5

    My wife and I have one credit card each. We owe nothing on it and only have a mortgage. When moving to Aus in 2016, like a dumbass, I didnt realise everytime i got a quote on car finance it was an application on my credit record. Me being an typical Ozbargainer I went fishing for best rates and comparisons and thus had multiple applications under my name. Despite a very high credit score it shows multiple applications for loans so I look like i have money issues. I never thought much of it as I thought common sense would prevail if they asked but it never even got to that. Straight rejection. I think after 3 or so years those applications disappear but im not sure. So biding my time to reapply.
    In saying that….I tend to agree with comments above. It seems you spend as much as you earn and that is a major factor for rejection.

  • Mechz on 07/02/2020 - 09:49
    +1

    Why wouldn't you roll all these debts into your mortgage for the lowest possible interest rate?

  • dust on 07/02/2020 - 09:51
    +3

    Why did you get a loan for a depreciating asset (your car)?

    • jimbobaus on 07/02/2020 - 11:02
      +3

      You do realise that this is what most people do
      car loan market is second largest lending market in Australia after home loans

      • dust on 07/02/2020 - 11:20
        +2

        My mother used to ask me if all my friends walked off a bridge, would I follow?

        • jimbobaus on 07/02/2020 - 11:23
          +2

          My point is your are attacking him (so to speak) for taking out a car loan, something the average Australian does every day.
          Not everyone has enough spare money to buy such an expensive asset without a loan.
          I will never understand why anyone who takes out a car loan/home loan gets attacked
          credit card i can understand however

          • dust on 07/02/2020 - 11:24
            +2

            @jimbobaus: I understand that I was born into a lot of privilege so won't be able to completely empathise, but I would sooner buy a $1000 bomb or ride a bike than get a car loan.

            • jimbobaus on 07/02/2020 - 11:33

              @dust: TBH so would I
              I am fortunate enough to have owned all my cars outright but i totally understand Car Loans
              Never understood why anyone would get a credit card though unless it was for an emergency or the like.

              • 0FoxGiven on 07/02/2020 - 12:42
                +3

                @jimbobaus: I owned my cars outright too but I run all my purchases through my credit cards and pay them off in full every month. I do so because, I earn points for spends (which i sell for money) and I have claimed hundreds of dollars every year in "cashback" on price protection claims on electronics and other non-grocery purchases.

  • Baysew on 07/02/2020 - 09:56
    +2

    Athena was the god of Wisdom, in your case just a commercial decision.

    • HighAndDry on 07/02/2020 - 11:10
      +1

      One could argue they exercised great wisdom in making this decision with regards to OP…

  • stirlo on 07/02/2020 - 11:09
    +5

    I feel like the plan should have been to refinance the loan and then draw it down to pay for the car, holiday and renovations.

    Instead you took out multiple lines of credit with multiple banks including 2nd tier lenders like GE and HSBC and you wonder why you sound risky to lend to? These organisations don't just look at the credit score number when making their decisions.

    I'd try asking you current mortgage provider to consolidate/refinance, which is what you should have done in the first place…

    • HighAndDry on 07/02/2020 - 11:11
      +2

      The GE creditline one especially - that's not usually who people go to first for loans, I wonder how many other places OP might have applied to.

  • tsunamisurfer on 07/02/2020 - 12:00
    +4

    OP you have your mortgage, a car loan, a holiday and renovations all paid for by credit.

    We of course don't know the figures but those are likely not small numbers and can easily accumulate to a point where Athena don't feel you are a good risk.

    I have worked in banking for years and I can tell you they put all these things into complicated calculations to come up with that result.

    Take this as a good indication that you are at an 'at risk' situation even though you don't see it, if a bank that wants to lend you money doesn't want to lend you money, there is a problem on your end.

    Furthermore, I see people who go on holidays on credit as a huge red flag.

    • HighAndDry on 07/02/2020 - 12:11
      +2

      Good points, and yeah:

      they put all these things into complicated calculations

      It's definitely a bit of a black box, and

      if a bank that wants to lend you money doesn't want to lend you money,

      Yup. OP also shouldn't blame the lender - if the lender could be guaranteed that if OP didn't repay they could still recover by repossessing the ppty or bankrupting OP, they'd lend at the drop of a hat. But the Royal Commission and people buying into sob stories have made lenders more cautious.

      There were numerous stories of people crying about "they knew I had debts and spending issues and they still lent to me, that's unfair and I shouldn't have to repay".

      • tsunamisurfer on 07/02/2020 - 12:35
        +9

        90% of Irresponsible Lending was actually Irrespondible Borrowing.

        Borrowers are 99.99% of the time presented with an estimated repayment amount at the beginning of the process and again the finalise repayment amount at the end.

        The customer are mostly 'Yep Yep….just gimme my Ford Falcon / 75' OLED / 2 week trip to Bali'.

        Many people are prudent but many live for the now and worry about the other stuff (repayments) later.

        Yet the Banks are blamed solely when things go wrong.

  • snooksy on 08/02/2020 - 09:12
    +4

    As others have clearly stated but I would like to raise one more point. You have a history of spending on unnecessary items on credit instead of saving. Unless your house is uninhabitable (in which case I’d question why you bought it) then renovations and holidays can wait until you have saved for them. You also purchased a vehicle while carrying a high level of existing debt. Now I’m not sure of your income but unless you are well into the mid to high 6 figures then carrying a mortgage, car loan, renovation loan (credit card 1), holiday loan (credit card 2) seems excessive and living beyond your means. The worry for the bank is that you will roll this debt into your mortgage then go about doing this all again. Applying for another credit card or two to fund unnecessary expenses and then you are back in the same position. It looks to me based on the levels on outstanding debt you might have reached your debt ceiling based on your income. I think you should look at paying of the credit cards first and cutting them up. Then you still have a relatively large mortgage and a vehicle loan to pay off. The vehicle is a depreciating asset so losing a few thousand every year no matter what you do with the car. I think the lesson here is for you to not pay for unnecessary items on credit card that you don’t pay off quickly. While you are paying for these other debts you aren’t contributing extra to your mortgage. If you can pay more than the minimum on your mortgage consistently then it shows to a borrower that you can afford to take out more debt.

  • James Nav on 08/02/2020 - 21:08

    You can spend however you see fit, but surely can you not see the red flags being raised if you need a credit card to pay for a holiday despite earning 200k??

  • badg3rz on 09/02/2020 - 08:26
    +1

    Cancelling a credit card also goes against your finance or credit score, that's why I am keeping mine.

    • passwordistaco on 10/02/2020 - 08:53

      is this really true? Kinda find it hard to believe.

      • stirlo on 10/02/2020 - 11:21
        +2

        No, it is not true.

        It's a common misconception based on advice from America. In the US they have limited credit reporting so it is important to have some form of credit to establish a history hence the advice to keep credit cards active. In Australia we have positive reporting so you can establish a credit history simply by paying bills on time. Having an active credit card will always diminish your borrowing capacity as when doing the calculations they assume it is maxed out and accruing interest at the full rate.

      • anglais on 11/02/2020 - 11:41

        Churning credit cards has an effect but I imagine primarily from the number of credit checks.

        I have not missed a payment in several years but due to churn the credit rating doesn't look that hot.

  • sweefu on 12/02/2020 - 09:07

    Broker here.

    Athena is not open to the broker channel, so I don't know their credit policy in depth. However, they seem to be very restrictive on policy, and are accepting only the most vanilla deals.

    There are many lenders in the market that would assist with debt consolidation at rates not much higher than athena.

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