Why Can’t You Get Finance?Apr 12, 2016 Blog RainFin , SME
It’s something that many an individual and business owner has faced. You need access to money to make an essential purchase…
Maybe you want to extend your house to make room for a new family member. Perhaps your business could fulfil more contracts with a new piece of machinery. Whatever the reason – you need access to finance and you are refused – it could leave you scratching your head and wondering why.
Reason 1: You have a poor credit rating
Poor credit ratings can creep up on you. The odd late payment here; a hard credit search there – they all add up. Although it can feel unfair having to wait to build your credit score up again – it is a situation where making sensible decisions, and remaining patient is key.
If you want to improve your credit rating, check out our blog on Improving your Business Credit Rating.
Reason 2: You have too much credit available
Believe it or not, even as a responsible borrower, if you have too much credit available lenders may be reluctant to lend to you.
It doesn’t matter if you don’t use your overdraft facility, and pay off your credit card every month. If you have access to a large amount of credit, you run the risk of acquiring an unmanageable amount of debt. This is unattractive to credit providers.
Reason 3: You’ve applied for too much credit
This is a very common mistake. Every time you apply for credit, the lender is likely to check your credit report. Credit checks leave a footprint on your credit report. Although a credit refusal will not be listed on your report; if you have too many credit footprints it could indicate financial difficulties, or fraud. This is a red flag for credit providers.
Reason 4: Your details are inaccurate
The questions asked by financial lenders can seem tiresome to complete. They require accurate record keeping, which requires long-term organisation and the preparation to have these documents at hand. If you are serious about getting access to funding, be as accurate as possible.
While you may not be sure how long you have been at your current address, if the details you give to a lender are not accurate it could delay your application, and even worse, you could be suspected of fraud and refused credit.
Reason 5: You are not registered with the CIPC
If you own a business but have not yet registered it with CIPC and trade in your personal capacity, you are missing out on the opportunity to build a credit rating for your business. You may find it easier to obtain a business loan than you would a personal loan for business matters.
If you’d like to find out more about registering your business, visit www.cipc.co.za.
Reason 6: You don’t fit the lender’s profile
Some lenders like to target a particular type of customer; one with a particularly high or low income, for example. Lenders should be upfront about this and will usually tell you if this is the reason your application has been refused. Do your research before applying and make sure you’re likely to fit their borrower profile.
Getting access to the finance you need isn’t always easy. But your financial future is in your hands. By taking control of your finances, you can build a stronger credit profile and put yourself in a better position to acquire funding in the future.
At RainFin, we look at more than just your credit rating. We assess your overall financial health and potential. To find out more, visit www.RainFin.com.