We look at the dangers of being less than honest when it comes to finance and how you can lose your good credit rating because of lying on your finance application. We also see how lying can cross over into credit repair – and how a lie will invariably be caught out and ruin your chances of restoring your good name.
By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.
Lying to your lender
One of the most drastic causes for a bank rejecting a loan application is through fraud or through not disclosing all information. So why do so many people still lie on their finance application?
Perhaps we want to appear to earn more than we actually do, or perhaps we don’t want the lender to know all of our debts?
But according to RateCity.com.au in its article Why risk it? Don’t fib on your mortgage application, people who lie on their finance application are putting themselves at risk.
“Typically the amount you are approved for on a home loan is based on the information in your application, so lying about this means you have a higher chance of over-committing yourself and not being able to afford the repayments with the possibility of losing your home. Lying can also impact your credit history which will affect any future applications and loan approvals.
Being dishonest can make you look bad because if you are lying about one thing they may wonder what else you are lying about. If you are caught out your lender could deny your application and you could lose your chance of buying the home of your dreams, so why risk it?” the article says.
The article quotes a Veda Advantage study showing 1.6 million Australians have lied about their financial information when applying for a loan, including mortgages.
“one in 10 Australians admitted to not being truthful in order to obtain a loan. A massive 823,000 borrowers said their total expenses were less than what they actually were and 342,000 said they earned more than they really did,” the article says.
The introduction of new obligations on brokers and lenders through the National Consumer Credit Protection Act (NCCP) means financial institutions will have access to more of personal financial records so that they are better able to accurately assess the credit risk of each application.
It is likely that people caught giving false information on their applications will have more chance of being caught, and their future tarnished.
If you are caught lying, your application is normally completely dismissed. Also, your omission could be viewed as purposeful deception or fraud.
So honesty really is the best policy.
If you’re not sure whether you will be approved for finance, rather than lying on your application, it might be a good idea to talk honestly to a broker about your situation prior to making a finance application and prior to creating a ‘credit enquiry’ listing on your credit file. The more good honest information they have, the likelier they may be able to assess your chances of getting over the line prior to the application – they could even run something past a lender for you if there’s something in particular you are unsure about.
Lying to your credit rating repairer
Likewise, some people are so desperate for credit they even lie to their credit repairer if they need bad credit history removed. It can be a case of people telling their credit repairer what they think they want to hear rather than the truth. But this is no help to you or to us.
When addressing credit listing complaints, the truth generally catches up with consumers as well as creditors.
Credit rating repair is about enforcing legislation to negotiate the removal of credit listings that have been placed unlawfully on your credit file.
In order for the credit rating repairer to exhaust all avenues for removing an unfair listing, we need the truth, the whole truth and nothing but the truth.
Creditors generally have extensive records on correspondence with you, as well as the circumstances around the placement of the negative listing on your credit file. If we work on your behalf to apply the letter of the law in the wrong circumstances your request for correction or dispute is most often rejected and you lose your right to have your credit file listing removed – regardless of whether it should have been there or not.
The best course of action is to be upfront about your circumstances and the credit rating repairer can decide whether based on the truth, you would qualify for credit rating repair. If you do qualify, the credit rating repairer knows everything about your case and they can prepare a better quality complaint in less time.
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