MyCRA Expert Credit Repair Lawyers Can Fix Your Bad Credit So You Can Be Approved!
If you have a default, Clear-Out, Judgment, or Writ noted on your credit file – then you have one of the 4 common types of ‘bad credit’ which show up on Australian credit reports every day. It may be something you have been aware of since your Creditor put it there, or it could be something that slaps you in the face right when you are applying for a loan for a house, car or credit card. But if the question you really want answered is…’How can I get a loan with bad credit?’ we show you 5 ways you might still qualify for a loan while you have a black mark on your credit report.
By Graham Doessel, Founder and CEO of MyCRA Expert Credit Repair Lawyers and www.fixmybadcredit.com.au.
1. Apply with a lender who does not use credit scoring
Recently Your Mortgage magazine published the Six ways to get a loan with bad credit, written by Smartline Mortgage Adviser, Kim Wight. Here is her first piece of advice on applying for credit:
Most lenders use a computer-based system called credit scoring to assess your home loan application, says Ms Wight.
“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. In other words, ‘computer says no’,” she explains.
“By applying with a lender who does not use credit scoring, your application – and the 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; it can be a case of, ‘human says yes’.”
2. Apply with a non-conforming lender
A non-conforming lender specialises in loan products for higher risk clients. These lenders are an alternative for those people who do not meet the lending criteria of traditional institutions for a variety of reasons, which includes bad credit clients, limited documentation, and low or no deposit clients. With the higher risk also comes a higher interest rate – usually 1% to 3% more than the standard interest rate.
On the downside, this may add thousands of dollars over the life of the loan. Also non-conforming home loans lenders will require stricter repayment conditions and may penalise late or irregular payments. On the other hand if the payments are consistent and on time for a period of 1 or 2 years some may reward borrowers with interest rate cuts.
If non-conforming home loans borrowers make regular repayments over 3 years they may be able to refinance their home loan with a standard variable interest rate home loan.
But this type of loan should really be a last resort for borrowers – and we show you why.
Norm is looking at a $300,000 loan. The interest rate with the non-conforming lender is 9%. There is a difference of 2% from the standard variable rate of 7% on the loan he was applying for before he found out he had bad credit.
Norm and his family will pay $15,046.57 more in interest alone with the non-conforming loan just over those first three years prior to refinancing. Use our credit repair savings calculator to find out what it could cost you.
But how do you apply with a mainstream lender if you have bad credit?
3. Save more deposit and avoid mortgage insurance
If you save over 20% deposit, plus your stamp duty and legal costs, you may be exempt from mortgage insurance. The mortgage insurance covers the lender in case you don’t repay the loan. If you can provide the bank with an ample deposit, their approval may be all that is necessary to secure the loan. If your financials stack up, and you have a great deposit, the bank may decide to approve you despite that black mark on your credit file.
4. Prove to the bank that you can repay the debt
Your Mortgage also says it is necessary to show a good repayment history if you wish to be considered for a loan while you have bad credit. And this makes sense. If you can’t demonstrate you have moved past those previous problems, by paying your accounts on time – the bank will probably wish to decline your application – whether that be with a mainstream lender or an alternative lender.
“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,” Wight says.
“This includes not only your loans and credit cards but your rent and utilities as well. Evidence of regular savings will also strengthen your application.”
The other very essential thing to remember is that honesty is always the best policy when applying for credit. The worst thing you can do when you attempt to look into a loan with bad credit is pretend you don’t have it and hope that mainstream lenders don’t notice. Ah…they will – and this indiscretion will severely hurt your chances of obtaining credit.
5. Determine whether the bad credit should really be on your credit file
Sometimes bad credit history is legitimate. It is put there because we haven’t paid our bills on time, and the creditor, having done all the right things, has been left with no choice but to note it on our credit file.
But in other cases our credit listing shouldn’t be there – because it was issued to our credit file unlawfully. Here are a few quick examples of how bad credit history may be unlawful:
The listing is unfair (you don’t deserve to have the default in the first place); the creditor has defaulted the wrong credit file (eg system mistake or identity theft); the creditor has not given correct notification prior to the default – just to name a few.
In these cases and many more, it is in your best interests to check whether you might be able to have the bad credit listing removed from your credit file, so that you can apply with a mainstream lender. If in doubt – get it checked out.
You should repair your bad credit through a professional for a number of reasons…
1. Most creditors will tell you they can’t remove the listing.
2. You need to provide legislative evidence in order to prove the listing was placed unlawfully.
3. Negotiating with creditors in the wrong way could lead to a fight on your hands and/or documents and client notes ‘disappearing’.
The best way to see if you may be suitable for credit repair is by contacting a specialist credit repair company or a lawyer.
You can contact a MyCRA Expert Credit Repair Lawyers Credit Repair Advisor on 1300 667 218 or visit our main site for more information www.mycralawyers.com.au.
Image: Stuart Miles/ www.FreeDigitalPhotos.net
