This is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.
Every time that you apply for a home or investment loan, the lender will complete a credit check. See our tips on Credit reports for more information.
If there are negative details or past transactions showing unpaid debts, overdue accounts, over the limit transactions or dishonoured payments, then you have an Adverse Credit History. Reports with lots of activity may also be considered adverse.
An Adverse Credit History could mean that you have to pay higher interest and fees to obtain a loan or, worst case, you may not be able to obtain a loan approval.
Types of adverse details:
- If there are multiple credit history enquiries, you will need to advise the new lender whether or not you actually proceeded with each enquiry.
- If you have a Paid default listed, you will have to provide a written explanation as to why you defaulted in the first instance. The level of default will determine how the lender will view it. E.g:
- A single utility (electricity/phone) default, under $500 and noted as paid soon after it was listed – it is likely that the lender will still approve your loan application, after provision of a full written explanation.
- A personal loan default over $1,000 which took months to be noted as paid – will be viewed as more serious and may lead to a declined home loan application.
- If you have an Unpaid default, then this will lead most lenders to decline your loan application. You will need to pay the outstanding, and ensure that it is noted as paid on your credit file prior to a home loan application.
- Any level of bankruptcy or insolvency noted on your credit file will not be acceptable by most mainstream lenders.
There are specialist lenders who will consider any level of adverse credit history on a case by case basis.
Contact us to discuss your unique personal financial situation.