Of course you can!
Don’t be dismayed if you have approached the traditional Big 4 banks and they have declined your application due to bad credit as there are genuine alternatives still out there that can help you both purchase a property or refinance an existing home loan. Unfortunately, there seems to be a thought at traditional lenders that anyone with the slightest bad credit should be declined, no questions asked, which from our point of view is madness!
I can’t count the number of people that have come through our door with a default or judgement on their credit file they had no idea about, or one that was many years ago, that have been declined by the traditional lenders. They are, for all intents and purposes, perfect clients but have been dismissed by the traditional lenders. Luckily for these clients there are lenders that use a more common-sense approach to lending to people with bad credit. They won’t simply rely on an automated system to approve a deal or not, rather each assessor will consider the actual bad credit and decide if it is relevant. This enables the borrower to directly answer why they have a default or judgement or any other credit impairment. Sometimes bad credit results from events outside your control so having a real person actually listen to your story and be able to make a common-sense decision is a refreshing but logical change.
The key to securing a loan with bad credit is a two-step process. Firstly, you need to be honest with your past and be able to explain all your bad credit events and outline why they occurred. Secondly, you need to show how your situation has changed and why you should be considered for a loan. Common scenarios that I see are:
- Divorce – a couple may own a property with a mortgage but during the divorce it is common the mortgage repayments aren’t made. Typically, someone might want to stay in the house post divorce but can’t get the mortgage refinanced due to the mortgage arrears. This can hold up the divorce as one party seeks to find a solution. Some lenders understand this and if the new borrower can prove they can service the loan once it is in their name only then it is likely the lender will approve the deal. They are happy to concentrate on the future rather than what has happened previously.
- Ex Bankrupt – a client may be an ex bankrupt due to them being self employed previously. The business may have found itself in trouble thus forcing them into bankruptcy. In many circumstances the client may now be working on a PAYG basis with a regular income. This is a total change from what got them into trouble in the first place so rather than being fixated on the ex bankrupt aspect there are lenders who will consider this scenario from the day they come out of bankruptcy.
- Unknown defaults and judgements – a client may have no knowledge of a default or judgement on their credit file until they apply for finance. Quite often it is a utility or telephone company default that may be several years old. They may have not received any notification that the company has listed the default or sought judgement. These unknown defaults or judgements can be quite a shock, but if you deal with them quickly, by paying them, this can be explained to lenders. Most bad credit lenders will typically allow an unlimited number of defaults if they are older than 2 years, and if they are paid. Some will also allow you to not pay them if you are genuine dispute with the listing party.
- Bad Credit Score – a client may have a large number of enquiries on their credit file which may see them have a low credit score. With the Big 4 being essentially beholden to credit scores this can see you being declined for no other fact than you having an “overly active” credit file. This seems mad to me as it essentially stops people shopping around to get the best financing deal possible. Luckily there are lenders that are not driven by credit scores. As long as you can explain your enquiries and why there are there they are happy to consider pretty much anything. They instead concentrate on the actual credit facilities you have and whether you can afford everything you currently have. They realise people sometimes shop around for credit cards or home loans and it doesn’t mean they are a heightened credit risk.
In all these scenarios it is imperative that the bad credit is highlighted and explained. You then need to be able to tell them why things are different now. In many cases bad credit is not a hinderance in getting a loan.
Saying all this however, not every bad credit lender is the same. Each have their own different interpretation and credit policies. In some instances, a client may have two different offers from two different lenders but the interest rate might be as high as 2% different for exactly the same bad credit. It is vitally important to speak to a bad credit specialist as they can guide you through the different lenders to find the very best deal for you. They can also ensure that the application is put up in the very best light as they deal daily with them and know exactly what is required to get your loan approved. As the saying goes “first impressions count” and that is never more apt than with bad credit loan applications! With over 30 years experience in the bad credit loan space you can be confident The Finance Professionals can structure your application to get it approved quickly with a minimum of fuss. Don’t hesitate to get in contact with us for a free no obligation discussion of your current scenario.
Michael Padbury
1300 678 310 / 0447 018 260
info@thefinanceprofessionals.com.au
