Are you putting off buying a home due to possible bad credit or defaults? Chances are you may still be eligible for a home loan.
We often speak to clients who are unsure of their eligibility for a home loan due to a bad credit score or old defaults. A simple credit check, which Mortgage Choice Brisbane City can help you do, will allow you to find out your credit history and determine your position with regards to buying a home.
A default is an overdue debt (phone/internet bills, loan repayment, credit card, rates/utility bills, etc.) of more than $150 that is not paid within 60 days. If the default/s that you’ve had in the past have been paid then you will be in a much better position to apply for a loan. The main things that we look for when determining your options are;
- The type of default
- When the default occurred
- When the default was paid
- The amount the default was for
Bad credit is also something people are concerned about when speaking to our brokers. Defaults can have a negative effect on your credit score, but a lot of people don’t realise that there are a lot of other factors that can lower your credit score. Simply applying for things such as credit cards or a store card (Myer, David Jones, etc.), a car loan or personal loan can all have a negative effect on your credit score. That’s not to say you shouldn’t apply for such things, but just be mindful that even the process of applying for a car loan or credit card, even if you don’t go ahead with it, can temporarily lower your score. The exception to this is HECS or HELP debt, although this is still seen as a liability in the eyes of lenders, it does not have an effect on your credit score.
Broker’s Top Tips:
- If you have any type of loan/debt, make sure you always, at the very least, are meeting the minimum repayments.
- If possible, limit the amount of credit enquires you make. Applying for multiple credit cards before selecting one will still affect your credit score, it’s best to do your research first or speak to an expert.
- Pay off any and all debt as soon as possible, this demonstrates to lenders your ability to reduce debt quickly, as well as reducing your overall debt position faster.
- Budget! Make sure that you are aware of the money you have coming in and going out. This may highlight areas where you can afford to spend less money and therefore increase your savings or pay off debt sooner.
- Set financial goals - whether you have debt or not, this is a great tip. It can apply to both reducing debt or saving money. Set a dollar figure that you hope to have payed off/saved by a certain date.
If you would like one of our brokers to assess your eligibility for any type of loan, speak to us today. We can perform an obligation free credit report which will help you better understand your credit position and therefore your eligibility for a home loan. Call us today to chat with our award-winning brokers on 07 5436 6177