Credit Scoring

In recent months most lenders have adopted the policy of 'credit scoring' an application. This often happens before a file is even seen by an assessor.

Stated simply the lender uses a complex set of 'rules' to determine the risk associated with an application. In part this is based on historical modeling as established by the bank and if applicable mortgage insurer.

A score deemed to be in a risk category will usually result in the application being declined.

Personal Credit History

Lenders also rely heavily on your personal credit history (Veda, Dunn and Bradstreet, etc) which records every credit application or default. If an application has been declined because of this a broker can often argue your case.

What is you have a credit default?

We constantly come across clients who have some default listed on their credit report who were not aware of it. This may be the result of moving home or changing suppliers of a service where the final account was lost in transit or overlooked.

Defaults can be overcome with most lenders where the amount was below a certain $ level or the debt has been paid. Note that this will usually not be acceptable to a mortgage insurer (where you are borrowing over 80% of the purchase price).

Credit Repair Bureaus

A new industry has evolved in the past year dealing with the removal of some items on your credit file. These companies use the legal system to apply for an item/s to be removed from a file where it has been resolved or paid.

In the case of court judgments or where a bankruptcy has occurred it may not be possible but still worth the effort. For a list of who to contact please ask Your Finance Guru for details.