When you’re applying for some kind of loan or a credit card, the lender may ask you to provide a list of your assets and liabilities. This is to help them get a solid idea of your financial position to ensure you won’t be overextending yourself and that you’ll be able to service (pay back) any credit they provide you with.

To make sure you get all your information right and give yourself the best chance of getting your loan or credit application approved, it’s important to make sure you’ve got a good understanding of what exactly ‘assets’ and ‘liabilities’ are.

What are assets?

An asset is something you own of value that can be converted into cash (assuming it isn’t cash already). Common examples can include:

  • Savings
  • Property
  • Superannuation
  • Investments (e.g. shares)
  • Vehicles
  • Jewellery
  • Furnishings

What are liabilities?

A liability is a debt or obligation you have that you’re servicing. Examples include:

  • Home loan/mortgage
  • Maximum limit on a credit card (lenders typically look at maximum limits rather than whatever balance you may have owing on your card or loan)
  • Maximum limit for a personal loan or overdraft
  • Any study/student loans

Why do I need to tell a lender about my assets and liabilities?

It’s worth keeping in mind that lenders ask questions about your assets and liabilities to help make sure you’re getting the best arrangement for you. Being truthful when detailing everything you own and owe is likely to reduce the chance of complications later on that could stem from a lender providing credit to you based on a false or incomplete financial picture.

In CommBank’s Portfolio view, available in NetBank and the CommBank app, you can combine all your assets and liabilities together – including any you may have with another bank or lender – under a single tab to create a full and true snapshot of your finances.

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Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs. You should, before acting on this, consider the appropriateness to your circumstances.