When considering a loan application, lenders must make sure that the debt is affordable. This goes beyond checking if you have enough money to make each monthly or weekly payment. The total amount you owe is also important.
Lenders will look at all of your debts and compare this to your income to see if they think you owe too much.
For example, if you owed £20,000, but your income was £10,000, this would almost certainly cause a problem.
Additionally, a lender will look at your use of credit cards and overdrafts. If the balances on those accounts are also high, it’s another reason to reject your loan.
Read more about debt ratios and why they matter.