What is Bad Credit?
Bad Credit is determined by the information contained in your Credit File that is held at Australia’s credit reporting agencies. There are two distinct elements on your Credit File that can see you labelled as having Bad Credit.
- 1. Having negative listings such as Defaults and Judgements or being under a Debt Agreement or being Bankrupt
- 2. Having a Low Credit Score.
Negative listings on your Credit File come about due to you missing a payment on a bill, a credit card, a mortgage or any other debt in the past. Whoever is owed this payment has listed it on your Credit File to advise others that this amount is owed to them. These listings generally stay on your Credit File between 5 and 7 years, depending on the severity. Once they have been paid, the listing will be updated to reflect this but it will still remain on your Credit File until the 5 to year 7 period has elapsed. Debt Agreements and Bankruptcy listings are generally also listed for 5 years from the date of entering into the Debt Agreement or Bankruptcy. Having any of these on your Credit File will generally see your application for a Home Loan declined at most Australian banks.
A Low Credit Score is a reflection of the credit reporting agency believing you are at a higher risk of defaulting on your obligations. Equifax, Australia’s largest credit reporting agency, generates a Credit Score out of 1,200, with 0 being the worst and 1,200 the best. They use a vast amount of both financial and personal information to come up with this score. Lenders have realised this and it is now very common for most lenders to use a Credit Score to immediately decline a loan application if they feel it is not high enough.
Banks have got extremely efficient in instantly declining deals that have negative credit listings or a low credit score. It’s generally a non negotiable requirement that a clients credit is “clean”. As such it is of vital importance that prior to any application you know exactly what is on your Credit File. Each declined application reduces your Credit Score further so you need to know exactly where you sit and which lenders will consider your situation.
The Finance Professionals are a market leader in providing solutions for those with Bad Credit. We offer competitive bad credit home loans and bad credit mortgages that cater specifically to those who find they do not fit traditional lender credit policies.
Our specialist product range is ideal for borrowers with following credit impairments:
- Low Credit Score
- Mortgage Arrears
- Part IX or X Debt Agreements
- Discharged Bankrupt
- ATO Default
- Low Doc
How Does a Bad Credit Lender Work?
Lenders that provide Bad Credit Mortgages are typically far more flexible than traditional lenders. They will assess your application on a case by case basis and will listen to your prior history. They understand that sometimes things happen outside of your control and also that what happened several years ago may not reflect your current reality. It’s a more common sense style of lending. The interest rates offered by Bad Credit Lenders typically reflect the risk to the lender.
As a general rule, Bad Credit Home Loans are priced based on the following factors:
- The LVR of the loan sought – the lower the LVR sought, the lower the interest rate.
- The nature of the credit impairment – the less severe impairment, the lower the rate.
- The age of the credit impairment – the older the impairment, the lower the rate.
- Employment status of applicant – if applicant is a PAYG employee, the lower the rate.
Each lender assesses risk differently which can see a borrower get vastly different interest rates at each lender. For this reason it is imperative to speak to a trusted broker like The Finance Professionals who can impartially compare all lenders, finding you the very best deal for your individual circumstance.
Why Choose The Finance Professionals for Bad Credit Loans?
We are specialists in this field. We do not shy away from difficult scenarios and have a genuine desire to assist each and every client. As a bad credit home loan specialist, we have access to funding sources ideally suited for borrowers that range from minor credit impairments all the way through to ex bankrupts. Our close relationships with our lenders means that we have a deep understanding of each and every lender credit policy. Each lender in this lending space has their own identifiable niche so by choosing The Finance Professionals you can rest assured your interests are being best looked after.
The benefits of using us do not stop at our unrivalled knowledge. We understand the delicacy of your credit file and we will not submit an application without attempting to mitigate every possible issue a lender may raise. This attention to details comes from our in-depth knowledge of lender credit policy and our desire to not further damage your credit file by needless finance applications.
Lastly, once you have successfully settled your deal, we will continue to monitor the market for you and advise you if you are now eligible for superior deals. This may come about due to credit file listings dropping off or reaching a certain age, or may be as a result of lender policy change. We want to see you back in the traditional lending sphere and will endeavour to get you back into this space as quickly as possible.
Go to Scenarios
|Low Credit Score|
|Part IX or X Debt Agreements|
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