Even you have bad credit rating in the past we can find a lender to help you buy property Aug 28, 2018 | Business Loan Broker A bad credit record is a major reason due to which most of the home loan applications get rejected by lenders. People with bad credit record face difficulties in getting loan and have to knock the doors of various financial institutions. However, there are certain ways which can help you to get the home loan even if you have no or bad credit history. So, let’s first understand the meaning of bad credit, factors affecting your credit rating and ways to get home loan with bad credit ratings. What is bad credit? In Australia, thousands are people are having bad credit ratings. Bad credit is related to the status of your credit file which has the details about your financial activities and loans. Yours action related to borrowing are observed closely, out of them some give you bad rating and some help to build a good credit record. Your credit rating is very important for the money lenders. They check it before sanctioning your loan and can reject it if the rating is poor. Factors affecting your credit score Defaults- Defaults are recorded on your credit files by the lenders if you cannot do repayment on time. The next loan you apply may have a great impact of this as financial institutes sanction the loans based on the defaults on your file. More number of defaults makes you a high risk client. Enquiries- If you do so many enquiries and apply for the loans at many places, your credit score is reduced, no matter the loan is approved or not. Too many debts- Each and every debt you take is recorded in your credit file. If you have too many loans on the file, then you may face difficulty in getting new loan. Non-payment of credit bills and taxes- As per the new law, non-payment of credit card and other bills, personal loans and taxes are also noted in the credit record file and they are recorded as defaults. Payday loans- Payday loans are gaining popularity day by day as they provide you money in emergency. However, they can badly affect your credit records. Big lenders refrain from lending money to those depending upon such type of loans. Bad credit home loans In simple words, bad credit home loan is a loan given to people who have bad credit ratings. It is offered to those borrowers whose loan application is rejected by some other lender. They are not different from the home loans offered by traditional lenders, except the fact that it is provided to high risk borrowers. Their credit ratings are bad due delay in repayment of mortgage. Financial advisers and business loan brokers can help you to find the lenders who provide bad credit loans. They can suggest you the ways to get home loans even if you have bad credit ratings. How to get home loan with bad credit rating? There are several ways which can help you to get a bad credit home loan or improve your credit ratings. Let’s have a look at them in detail. Apply to those who don’t bother about credit scores- Many of the lenders in Australia make use of an assessing system, which evaluate your home loan application forms. The information gathered from the application is given a rating and if this system rates you as a risk, then your application is rejected even before the staff of the financial institute looks into it. You even can’t explain why your credit score was bad in the past. Therefore, it is better to approach a lender who does not use this assessment system. Here, the forms are assessed by human beings and hence, they can listen to your problems which contributed in your credit score going down. They can assess your situations in past as well as in present and then make a decision, which is positive most of the times. Try to avoid Lenders mortgage insurance- Generally, when you apply for the home loan and if the amount is more than 80% of the property value, then you need to take approval from two sources. First is the money lender and second is the insurer. This insurer safeguards the lender if you fail to repay the loan amount. If you have money to pay required deposit amount, stamp duty and some other expenses like legal fees, you can avoid the insurer from evaluating your loan application and the chances of your loan being approved are more. Show that your financial situation is improved- If your credit score is bad due to the problems you had faced in past, you have to show to the lender that, now your situation is improved. This can be demonstrated not only through credit cards, loan repayments but also through rent receipts and utility bills. Your regular savings can also increase the chances of your home loan being approved. Seek advice from the professional- You can take the help of professional who can advise about the improvement in credit reports. They scrutinise your credit report and see if any of the unfavourable records can be eliminated from it. Do the enquiries but wisely- It is very important to do home loan comparison for different lenders and then apply. You should apply to many lenders when you are doing enquiries. As mentioned earlier, every time you apply for the loan, it works against your credit rating. If the lender rejects your application, it creates further damage to the credit record. So, it important to do the enquiries wisely. Getting a home loan with bad credit score is no longer an impossible thing to happen. By following the above mentioned tips, you can certainly improve the chances of your loan getting sanctioned. You can also take help of financial adviser or broker who can inform you exactly about which lender will probably approve your loan. He will also let you know about the interest rates. You just need to tell them the reality behind your bad credit ratings and they will help you to avail best home loan rates, no matter what your credit record says.
