New research from Finder, Australia’s most visited comparison site, revealed that millions of Australians are avoiding credit applications due to fear of rejection.
A survey of 1,070 respondents found that 19% of Australians, nearly 4 million people, have not applied for a financial product in the past 12 months because they were worried about being knocked back.
Sarah Megginson (pictured above), money expert at Finder, explained the concern.
“As money has gotten more expensive to borrow, many lenders have become more scrupulous about who they’ll lend it to and it’s making people nervous,” Megginson said.
“If you don’t think you would meet the criteria imposed by lenders to secure the access to funding you need, you’re wise to steer clear.”
The survey found that 8% – 1.6 million people – hadn’t followed through on a credit card application, while 5% had avoided personal loan applications.
Other financial products, including home loans (5%), car loans (3%), and phone payment plans (2%), were also bypassed due to fear of rejection.
Megginson suggested steps to improve credit approval chances.
“Avoid things like payday loans, credit card cash advances, and BNPL transactions, as lenders see these types of habits as a ‘red flag’ that you’re not able to live within your means,” she said.
Megginso also encourages checking your credit score before applying for a loan or product.
“A good credit score will open up better financial opportunities, such as faster loan approvals, lower interest rates, and easier rental processes,” Megginson said.
Megginson highlighted the broader impact of the cost-of-living crisis.
“Households in all income brackets are feeling the pinch and it’s a vicious cycle,” he said. “Those who need the credit can’t access it and those who will be approved for the credit don’t need it as much.”
For mortgage holders, Megginson recommended hunting for better loan rates.
“For many households, the biggest hit comes from the mortgage, so start there. Even a modest reduction of 0.25% can translate into substantial savings,” she said.
Megginson also advises creating a plan of action for those struggling with household costs.
“If you’ve reached your limit on a credit card, devise a plan to begin paying it down,” she said. “If you are eligible for a 0% balance transfer card, this could give you some breathing room, or you could call your existing credit card provider and ask them to move you to a card with a lower interest rate.”
For further support, she suggested contacting the government’s free National Debt Helpline on 1800 007 007.
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