How bad credit history can affect you.
During your lifetime you may have had something as simple as an unpaid Telstra bill or a default on your home loan or credit card payment. The reason for the default may have been a bad life choice or it could have come about simply by circumstances out of your control, but ended with you not repaying the debt on time. No matter the cause or reason, the fact is that it would have been recorded on your credit file and becomes part of your credit history.
All your financial dealings are gathered together and linked to you because your credit history paper trail is what most lenders rely on before deciding whether to allow you to borrow from them or to reject your application outright.
Home loans for people with bad credit are available. Credit impaired home loans are available if you can meet the following criteria:
If you are not currently bankrupt or taking advantage of a part 9 creditor agreement within the Bankruptcy Act. (You can apply for a non-conforming home loan the day you receive your discharge from such restrictions).
If you can put together a minimum deposit of 20 per cent (or have 20 per cent equity in the property you want to refinance). The maximum non-conforming home loan is 80 per cent of the property value but any First Home Owner Grant (FHOG) you may be eligible to receive can be included as part of your deposit.
You will be required to find money to pay any stamp duty and other costs outside of the loan allocation funds.
Likewise, it does not matter if you have a large salary or not, you will still have to put up the 20 per cent deposit.
You will need to prove you have sufficient ongoing income to service the loan repayments.
Any outstanding debts whether in default or otherwise must be declared and be fully consolidated into your new mortgage and be fully paid out on settlement. Taking into account the consolidation of all outstanding debts, your new home loan can still not exceed 80 per cent of the property’s value.
How to get a home loan if you have bad credit.
Getting a home loan if you have bad credit is all about being prepared and being honest. You may have a lot of credit cards or you don’t always manage to pay your bills on time so you suspect that you have a bad credit history. Find out for sure before you apply. Before you worry for nothing about how you’re going to apply for a home loan with bad credit, obtain a copy of your credit report to find out exactly what you’re dealing with. This can be obtained at www.mycreditfile.com.au/personal/. Having a copy of your credit report before you meet with us helps us answer a lot of questions for you. This can also help you uncover whether there have been any mistakes on your credit report which have led to you having bad credit. Things like a bill being declared overdue when you have paid, or someone fraudulently using your credit card details. In these cases bad credit can often be fixed.
Be honest if you have bad credit. If you are honest about the fact that you have a less than perfect credit history, we can more easily find a way around the issue, rather than finding out too late at which point the lender will decline the loan. Take control of your credit. If you are able to show responsibility and restraint when it comes to your credit card spending, this can go a long way to showing that you have reformed your ways from those which got you into credit trouble in the beginning. If you are considering applying for a new home loan, start a regular savings plan as this also shows financial responsibility and stability.