No credit given once relationship soured
When recently separated Jan Bradley applied for a personal loan for what she believed was a relatively small amount of $10,000 at her bank earlier this year, she was shocked and dismayed at the way she was treated.
She feels her credit history as a customer for over two decades, first as a personal account holder and then as a signatory to a number of joint accounts with her former husband, had not been taken into account, although the bank says otherwise. "They said I didn't have any recent savings history," she says.
And that, she was led to believe, was the main reason her application for a loan was denied.
She had no recent savings history in her own name only and says she felt like a child when the bank suggested to her she open an account and save a little each month to prove she could save.
"I make $5000 a month. Why would I do that?" Bradley says.
She has a regular income of $70,000 a year and no outstanding home loans.
Bradley does acknowledge an issue with a late payment on a NAB credit card earlier this year but doesn't understand how that could be her fault.
"In December I applied to the National Bank for a credit card with the lowest possible line of credit, which was $500. It was approved ... and I waited for my statement. The repayment money was already sitting in my regular account. No statement. So the first week of February I rang the NAB," she says.
NAB's response was that she should have received it and the payment was due the previous day.
What she didn't realise was that they had already taken out the card's annual fee so the account was overdrawn. "My perfect credit flashed before my eyes."
The bank then told her that there would be no problem if she paid that day, which she did.
It turns out there was a problem, as this incident, and the apparent lack of savings history, are the reasons she has been given for having her loan declined.
An NAB staffer said the bank couldn't comment publicly on individual circumstances. They issued the following statement: "NAB recognises customers' credit history from a range of accounts, including joint savings and lending accounts."
But the bank also stressed the following: "NAB applies strict and sensible lending criteria to ensure we only lend money to those customers with the ability to repay it. NAB is committed to acting responsibly in assessing a customer's capacity to repay a loan.
"Before approving a home loan, NAB takes into account the likelihood of a customer repaying the loan, their ongoing ability to service the debt if economic circumstances change and the collateral an applicant can supply."
The Financial Ombudsman says it is not able to comment on the issue because it is outside their terms of reference.
"We don't actually handle disputes about handling of loans," a spokesperson says.
Consumer Affairs Victoria says it doesn't usually deal with issues relating to banks and bank loans.
Westpac was more forthcoming with details about its process. A spokesperson said it treats recently separated spouses equally, regardless of their gender.
"Credit history is based on accounts held, so if a customer previously held joint accounts then both customers are reflected as having held this account and any history is reflected as history of that individual. While an account may be joint, each customer is looked as an individual account holder within that account." But the problem is that regardless of a bank's policy, a bank can exercise its discretion when it comes to approving or disapproving somebody's application.
Bradley may or may not have had her credit application disapproved primarily because of the change in her marital status, but she maintains that that is the way she was made to feel by her bank.
Frequently Asked Questions about this Article…
According to the article, the bank told Jan Bradley her loan was declined because she had no recent savings history in her own name and because of a late payment on a NAB credit card earlier in the year. NAB staff declined to comment on individual cases but the denial was attributed to those two issues.
Yes. The article reports that NAB recognises customers' credit history from a range of accounts including joint savings and lending accounts, and Westpac explains that joint accounts are reflected as history of each individual who held the account.
Yes. In this case the article says a late payment on a NAB credit card was cited as one reason Bradley's subsequent loan application was declined, showing that even a single late payment can be considered in lending decisions.
Not necessarily. Westpac told the article it treats recently separated spouses equally and that credit history is based on accounts held, but the piece also notes banks can exercise discretion in individual lending decisions, so separation-related changes can sometimes affect outcomes.
The article quotes NAB saying it applies strict and sensible lending criteria focused on a customer's ability to repay, the likelihood of repaying a home loan, ongoing capacity to service the debt if economic circumstances change, and the collateral an applicant can supply.
The article notes that the Financial Ombudsman said the issue described was outside its terms of reference and Consumer Affairs Victoria said it doesn't usually deal with bank loans, indicating those agencies may not handle disputes about individual loan handling in cases like this.
No. The article describes Jan Bradley's experience where decades as a customer and signatory to joint accounts did not prevent a loan refusal; banks said they consider account history but still apply lending criteria and discretion in approvals.
Yes. The article points out that regardless of a bank's stated policy on credit history and joint accounts, a bank can exercise its discretion when approving or disapproving an application, which may lead to different outcomes for individual customers.
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