What to do if you have a bad credit historyAlmost all of us at one time or another have paid a bill past its due date, or due to circumstances beyond our control, found it difficult to make repayment on a debt or credit card. Unfortunately, as many later find out, a late payment or missed repayments can continue to haunt you when you go to apply for a loan and find out that your credit history is being held against you.

The issue with having a bad credit rating is that in most circumstances this will automatically mean you are declined application for finance. This is because statistically, when a person has a bad or poor credit history it is automatically assumed that the risk is higher, and that there will be problems with timely loan repayments.

When there is a default lodged on your credit history file, it generally lasts on the file for 5 years from the date of lodgement, impacting your ability to obtain finance over that time.

What to do if you find out you have a bad credit history problem

There are two things you should do if you find out you have a bad credit history:

  1. It’s important to know where your credit history is up to as a foundation of your application process. You should arrange for a credit report to be provided to you by applying for it online from a credit report provider, such as Veda or Dun and Bradstreet
  2. Once you find out that there is an issue, you should confirm whether it was your fault that the default has been listed and or if it was done in error (it does happen). If the default has been listed and it’s not your fault, you should first approach the person/company that has listed the default to dispute this. This starts the process of working together with them until it is removed, if time is an issue there are credit repair providers that can assist in this process for an agreed fee.

When is the credit problem insurmountable

If the credit issue is a problem, it then comes down to understanding how big of a problem it is. If the default was listed but you have made amends and made the payment in full then a specialised lending solution can help with a funding solution given the full circumstances. If the default is and remains unpaid, the question that will be asked is why? Is it in dispute? Or are you just failing to pay legitimate debts? It is more difficult to recover from a credit problem where legitimate debts have not been paid and there is no dispute.

What to do if you want to access finance?

At First In Finance, we are happy to work with you even if there is a credit history problem. If there is an issue or you think there may be an issue, it’s best to disclose it upfront, and then we can find a solution to move forward with an application. It’s much better than lodging and having the lender find out you have a default. If we don’t know upfront, we’re on the back foot when it comes to explaining the situation and reasons why. We’ve experienced this exact scenario many times and it is generally detrimental to your chances of getting your finance approved, unless there are genuine mitigating circumstances.

What are the other options if your bank has already rejected an application for finance?

Just because one lender says no, due to a bad/poor credit history issue, it doesn’t mean we can’t help you. Recently a First In Finance client, found out there was an issue after applying for a loan and they got knocked back. They were disappointed and frustrated and thought getting finance would be impossible, until they were referred to First In Finance.

We discussed the issue, provided a solution which resulted in the issue being rectified and a traditional lending solution was provided.

Why brokers are better than a bank when you have a previous credit history problem

Brokers, work for you. We have your best interests at heart, whereas a Banker has the Bank’s best interest at heart. We also have access to a wide variety of solutions. Specialist lending solutions can be utilised. These are sometimes good options to use, as they can help you get over a hurdle. Then, if the credit defaults stays on file for a period of time, once it is removed, the loan can generally be refinanced to a more traditional funding source.

If you need expert advice and support when it comes to obtaining finance, contact us for an obligation free consultation.

 

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