At a glance
- The problem: a low credit score, with missed repayments on personal loans and credit cards.
- What we did: found a lender whose policy suited their situation and helped them buy their first home.
- A couple of years later: refinanced them to another bank at a rate more than 1% lower.
The situation
This client wanted to buy their first home, but their credit score was low. They had missed repayments on personal loans and credit cards, and that history shows up on a credit report. Many lenders will decline an application like that straight away.
What we did
Lenders don't all treat credit history the same way. Some rule out any missed payments, while others look at what happened, how long ago it was and what the borrower's situation is now. We found a lender whose policy fitted this client's circumstances and put the application together carefully, so the lender had the full picture.
That got them into their first home. Lenders that take on past credit issues often charge a higher rate at the start, so we treated it as a first step rather than the final loan.
The refinance
Over the next couple of years, the client kept up their home loan repayments. With that record behind them, we refinanced them to another bank and cut their interest rate by more than 1%.
What you can take from it
- Check your credit report before you apply. You can get a free copy every three months from each credit reporting body, and errors can be corrected. Source: OAIC
- Don't apply with lender after lender. Each application adds an enquiry to your file. It's better to find the right lender first. What lenders assess differently explains why.
- Your first loan doesn't have to be your last. A few years of on-time repayments can open the door to a better rate.
Every situation is different, and some credit histories will rule out certain lenders for a time. A free chat is the quickest way to find out where you stand.
