Scenario 1:
You are a young parent in your 20s. This is probably the most exciting time of your life. You plan all the trips you wish to take your new born child on. Therefore, you desperately require a new car to transport your growing family. You apply for the car loan but you learn of two defaults existing on your credit file.
Cost of this: No car to transport your newborn child.
Scenario 2:
You have been working really hard for two years in a full time job. You receive a solid and steady income. Every week you put money aside to save for a deposit on your new home. You have been planning and designing every detail from the flooring to the fabric of the curtains. You wonder if you will ever there. You reach your goal amount! You are now able to begin searching for the house you have been working so hard for.
You do some research, find a mortgage broker, and begin the process of applying for a home loan. Your mortgage broker asks you a standard array of questions. One of those questions is if you have any problems on your credit file. You declare a store card that you had when you were younger. At this time your spending was out of control and you were unable to keep up with the payments. Although you eventually paid this debt you were still struck with a black mark on your credit file at that time.
Because of this, you could only be approved for high interest finance through a second-tier lender. They charged a large initial fee and offered an interest rate two percent above what you could have got if you had a clean credit file.
Cost of this: A large amount of your deposit.
Scenario 3:
You and your partner have been saving for your retirement all of your life. Your children have moved out. You both decide that this is now a prime time to fulfill your dreams of adventuring to all the places you wish to visit on your own boat. You have collectively decided on the boat that suits both your needs. This will make your retirement the luxury experience it should be.
You approach a broker to be told the devastating news that there is currently a court judgement on your credit file. This court judgement would remain on your credit file for another four years. The judgement had arisen as part of a commercial dispute that had now been settled. Your broker could not recommend a second-tier lender because the interest rates were so high that you would be put in hardship trying to pay the monthly instalments.
The worst part is the cost of finance to purchase a leisure product is expected to rise over the next four years. Therefore, when your credit file is clear, you wouldn’t be able to afford to purchase the dream boat. Taking away you and your partners dream of adventuring around the world on your own boat. Something you have both planned for all your life.
Cost of this: Unfulfilled life dreams
The thing that all these three scenarios have in common is a default has affected their way of life or dreams within life. These scenarios demonstrate the inability to obtain adequate finance. Defaults on credit files could cost you more than the cost to have it removed.
