The responsible lending rules in brief
ASIC explains that credit licensees must not enter into, suggest or help you apply for a credit contract that is unsuitable for you. To meet that obligation, lenders do three things.
- 1
Make reasonable inquiries
About your requirements and objectives, such as what the loan is for and how much you need, and about your financial situation.
- 2
Take reasonable steps to verify
Check what you've told them against evidence, such as bank statements, payslips, Centrelink statements or a credit report.
- 3
Assess the contract
Decide whether the loan is 'not unsuitable', including whether you could repay it without substantial hardship.
What lenders usually look at
| Area | What may be checked | Why |
|---|---|---|
| Identity | Name, date of birth, address and identity documents | To confirm who you are and help prevent fraud. |
| Income | Payslips, Centrelink statements or deposits in bank statements | To confirm how much you receive and how regularly. |
| Living expenses | Housing, food, utilities, transport, dependants and other regular costs | To see what's left for repayments. |
| Existing debts | Credit cards, loans, buy now pay later and any arrears | To understand your total commitments. |
| Credit report | Repayment history, defaults and recent applications | To understand how past credit has been managed. |
| Purpose and amount | What the loan is for and how much is needed | To check the product fits and you aren't borrowing more than you need. |
How to prepare honestly
- Use realistic figures for your expenses; understating them can lead to a loan you can't afford.
- Mention changes you can see coming, such as a new job, parental leave or a rent rise.
- Include all debts, including buy now pay later and money owed to family.
- Avoid lots of applications in a short time; each one can show on your credit report.
- If you're declined, ask why, and check your credit report for errors before applying elsewhere.
When applications open, Evercrest Finance will assess every application individually. Meeting the basic eligibility requirements does not mean an offer will be made. Evercrest will offer one loan: $2,050 to $4,600 in cash, repaid over 3 or 6 months, with a $400 establishment fee added to the loan.
Assessment questions
Does a lender have to check my bank statements?
Lenders must take reasonable steps to verify your financial situation. Bank statements are a common way to do that, but the method can depend on the lender and the product. Evercrest Finance will read 90 days of bank data through a safe, read-only connection.
What does 'not unsuitable' mean?
It's the legal test. A loan is unsuitable if it doesn't meet your requirements and objectives, or if you could only repay it with substantial hardship, such as by going without essentials.
Will one declined application hurt my credit?
The application can appear on your credit report as an enquiry. Several applications close together can make lenders more cautious, so pause and check why you were declined before trying again.
Can I find out why I was declined?
You can ask the lender. If your credit report played a part, you're entitled to a free copy if you've been refused credit in the past 90 days.