Archive for Bad Credit History

Your Credit Score

Ok so you  have heard about this thing called your credit score but do you really understand what it is?   I have come across a helpful service that will allow you to look up your credit score with VEDA (at no cost). VEDA is the biggest credit reporting company in Australia and virtually all of the banks and lenders buy information from them (to varying degrees).

Obtaining your score on this website will only take around 1 minute. https://www.getcreditscore.com.au/

Before you get started, the credit score is just that, a bottom line score. The score does not show your detailed credit history.  We should also note that most lenders have their own scoring systems that only partially use VEDA information.

Each of the scoring categories below have implications for your future credit applications.

Mortgage Broker Sydney

 

 

If you want to discuss this or any other finance questions please call me Kim Wight Mortgage Broker Sydney on 0412167551 or email kwight@smartline.com.au

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Credit Cards Or Personal Loan Debts

Do you have credit cards or personal loan debts that stubbornly refuse to go away? I  may have a solution.

Whilst a minimum monthly credit card repayment of 3% seems quite easy to handle at first glance, a $30,000 debt will require a $900 per month payment. A significant commitment.

Compare this with a current $30,000 home loan and the minimum repayment would be approximately $157 per month (see below).

Credit cards or personal loan debts

Given the right set of circumstances, I  can sometimes alleviate this type of cash flow burden by consolidating credit cards and personal loans into a residentially secured loan.

However, if this option is not possible or desirable, there is one very effective long term solution.

“Cut it up and pay it off.”

“Cut it up” – This part of the solution is often seen as too difficult because shopping with a credit card is so convenient, however, the credit card organisations such as Visa and MasterCard now offer debit card facilities which give people all of the efficiencies of using a credit card without the temptation of using the credit.

“Pay it off”– This part of the solution can be made easier too. Most credit card providers have a direct debit system that will allow customers to make automatic fixed repayments (similar to a personal loan) on their credit card.

I believe that long term debt should only be used for buying assets that have a reasonable chance of appreciating. Holidays, cars, LCD screens and boats generally head the other way and should only be financed over a shorter term. There is nothing worse than a big debt with nothing to show for it.

This is a sensitive issue to bring up with people but if you know of anyone that would like to talk to me, Kim Wight Mortgage Broker Sydney  about getting their credit cards or personal loans in order, I would be more than happy to assist with some confidential and useful advice.  

 

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Your Credit Report – The Changes

There was a big change to Australia’s privacy legislation in 2013 and it changed the way your Credit Report looks and rates you for  future borrowing. There was a lot of controversy at the time, however, like many things these days, our attention gets diverted easily and often.

The rubber hits the road on that legislative change on the 1st of January 2015 and it impacts you.

Our credit providers will be able to view a lot more information about your credit behaviour.

Up until now, lenders could only see the following information about you;

  • Your defaults (only over 60 days in arrears),
  • Your insolvency history (ie bankrupt events), and
  • Your credit applications (although they could not see if your application was approved or declined)

 In 2015 (6 weeks) they will be able to see the above, and a lot more…..

  • The date that your credit was opened or provided (in other words, if your application was approved)
  • The type of credit that you have and what your credit limit is (in other words, if you have used up all of your credit)
  • The date that a credit account was closed, and
  • 2 years worth of month by month repayment history on each credit facility that you have.

Your repayment history will report like this (the boxes with numbers represent the days in arrears) –

My Credit rating

Most of Australia’s lenders have agreed to provide your data to the credit reporting agencies. If a lender does not report this information they do not get to see the information from the other lenders. So it is just a matter of time before every licensed credit provider jumps on board.

I am  not saying that this change is necessarily a bad thing.  I  could even see a situation where clients with good credit ratings are offered a better deal. However, we now live in a new world of big data. Keeping your credit rating clean has never been more important.

As always if you have any questions about this r maybe have had difficulty getting a home loan due to a poor credit report contact me Kim Wight, Mortgage Broker Sydney and I will be happy to answer your questions.

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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YOUR CREDIT FILE

credit fileThe 12th of March 2014 heralds several significant changes to the information that will be held on your credit file.

I recognise that this may seem like a very dry subject but it is very important for you to be across this information.

Until now, Australia’s privacy act has limited the credit reporting agencies to only providing negative information about your credit background. This includes credit defaults, bankruptcies and any credit applications that you have made. That limited level of information reporting is about to change in a significant way.

To see exactly what new information will be available on your credit background you can click the following link to a very comprehensive website:

http://creditsmart.org.au/what-has-changed#included

The main points of change are as follows:

1. Information about your monthly repayment conduct (ie paid on time) over the past two years can now be reported.

2. If you apply for credit, the decision by the credit provider can now be reported (declined or approved).

3. The current limit on all of your credit cards (and other credit facilities) can now be reported. This also means that if you get a limit increase, this can now be reported on your credit record.

4. The repayment term and repayment type on all of your credit facilities can now be reported.

5. A credit provider can now also provide an opinion that you have fraudulently attempted to get credit or fraudulently evaded your obligations to repay credit, or that you do not intend to comply with your repayment obligations.

6. Credit defaults can be lodged on any outstanding amounts over $150 if you are more than 60 days behind on your repayments.

For the majority of people, there should be great benefits associated with this new credit reporting system. The overall cost of credit fraud in Australia is quite high and this new system could go a long way toward reducing the cost of credit for all of us. Let’s hope credit providers pass on the savings….

It is also important to note that the 12th of March is only the point where the credit providers can legally start reporting this information. Most credit providers will take time to build the systems capabilities needed to take full advantage of their new found freedom.

If you (or your family or friends) are currently experiencing difficulties in relation to any credit facilities, please contact me Kim Wight Mortgae Broker Sydney . I  have a range of options that may be available to you.

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney, Uncategorized

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HOW TO GET A HOME LOAN WHEN YOU HAVE A BAD CREDIT HISTORY

Bad Credit history

Getting a home loan when you have a bad credit history report is difficult but there are some steps you can take to make the chances of approval better.

How do you go about obtaining a home loan when you have bad credit history?

Apply with a lender who does not use credit scoring. 

Most lenders use a computer based system called credit scoring to assess your home loan application. This means that the data collected in your application is given a rating or score and if the “computer”  scores you as a bad risk  the application is declined before a real person has a chance to look at the application or hear your story as to why you have had credit problems in the past. Computer said No

By applying with a lender who does not use credit scoring your application and reason for your past credit problems will be assessed by a real person who can evaluate your personal situation past and present and use this information to make their decision on your application. Human said Yes.

Avoid Mortgage Insurance.

When you apply for a home loan there are two approvals that have to be given if you borrow more than 80% of the value of the property.  One is the lender and the other is the mortgage insurer who protects the lender in case you default on the loan.  By having funds to cover 20% deposit and plus other costs of stamp duty and legal fees you avoid the application be assessed by the mortgage insurer and have a greater chance of the loan being approved.

Demonstrate that you have improved your financial situation.

If you have had problems in the past you need to show that you are now back on track by ensuring all current financial commitments are being paid on time. This includes not only loans and credit cards but rent, council rates and utilities.   Evidence of regular savings will also strengthen your application.

Apply to a Specialist Lender

Depending upon the severity your bad credit history the mainstream lenders may not be able to assist you but there are specialist lenders in the market place who price their products based on the element of risk.  The interest rate is high but people usually only stay in these products long enough for their credit situation to improve and then they refinance to a lower rate.

Seek professional advice regarding your credit report.

There are a number of specialist credit repair agencies that may be able to assist you with cleaning up your credit report. It is advisable to speak with them or a solicitor to investigate if it is possible for adverse entries on your report to be removed.

Don’t shop around, use a mortgage broker.

It is important that you do not apply with lots of lenders as you shop around for a home loan as each time you do this is recorded against on your credit report and if lender after lender is declining your application this will further impact your credit report. 

A mortgage broker can assess which lender is most likely to approve your loan application and what interest rate and charges may be applicable. It is important that you tell your broker the complete and honest story of why you have experienced credit problems so they can address the problems with the credit department of the lender.

If you have any questions about this or your situation please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

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