I Have a Default on my Credit File. Can I get a Home Loan?
Have you been declined for a home due to having impairment on your credit file? While for some lenders, this could raise a red flag on your application and lead to a decline there are still options available to you. What is important here is to understand the nature of the default on your file.
Minor Credit Impairment
Credit impairment refers to any situation where there is a "concern" with your credit history. Minor credit impairment specifically refers to when:
Your credit file has more than 5 credit enquiries listed on it within the past 12 months. Any credit applications, both incomplete and complete, will generate new credit enquiries. Creditors can leave an enquiry even if you've just had a discussion and not proceeded with an application.
There is no more than one default(sometimes two) on your credit file and it is less than $1,000(in some cases $2,000). Its very common for telco and utility provides to default you after relocating homes. This is usually because the bill was sent to the wrong address.
Your credit file is currently clear but you have previously been bankrupt. Unfortunately like a bad tattoo, bankruptcy sticks around for life. The Bankruptcy Registry Search (BRS) keeps a permanent record of all bankruptcies.
You have a history of poor loan repayment conduct. This could have late payments on current and previous debts, overdrawn accounts, dishonour fees or negative balances. One of the main reasons applications get declined is for late repayments that may have happened many years ago! Unfortunately banks don't forget!
Obtaining loan approval even with minor credit impairment can prove quite the challenge. Any hiccups along the way will leave you with a decline or an overly expensive product. However in the right hands you will still be able to:
Borrow up to 95% of the purchase price
Qualify for a no deposit loan with the help of a guarantor!
Be eligible for some of the most competitive rates in the market!
Get approved with one of the major banks as long as your case is presented in the right way!
Tim applied for a home loan with on of the major bank which was auto declined to to credit scoring. Tim did not know the reason for the decline and had approached Home Loan Depot to help with his home loan application.
Upon approaching Home Loan Depot, we reviewed Tim's credit file. Tim had a $320 Telstra unpaid default registered against him from 17 months ago. This was not brought to his attention until he tried to apply for a home loan. The default coincided with Tim moving houses and not receiving the bill.
We got Tim to follow-up with Telstra to sort out the unpaid bill. Once paid, Home Loan Depot was able to help review his application and place Tim's application with a mainstream lender that did not credit score. We were also able to find him a more competitive rate than what he was previously offered.
At Home Loan Depot we understand how to present a bad credit application in the right way to get it approved at the most competitive rate with the right lender.