Having an unblemished credit file can be the difference between having to get a bad credit home loan with higher interest rates and fees and getting a loan with lower interest rates and fees through a mainstream lender.
Latham Moore & Associates are a consulting firm who specialise in commercial and consumer credit reporting.They requested 58 of their clients to order a copy of their CRAA reports with the following outcomes:
- Eight of the 58 were told there were no reports for them. This would occur if they had not applied for any credit facilities within the last seven years
Of the remaining 50 clients, 39 were provided with reports of which 34% or a third had mistakes entailing:
- Incorrect Driver Licence numbers
- Incorrect dates of birth
- Incorrect employment details
All of this mis-information can increase the chance of a listing being captured against an incorrect record.
If you feel that an entry has been made against your file incorrectly or unjustly, there are organisations that specialise in removing defaults from people's credit files. They usually do this by demonstrating the record has been incorrectly attached or by demonstrating that the rules for listing a default have not been followed. In Australia there are strict guidelines which must be followed in order to list a default on someone's CRAA.
There is a cost for this service, usually an upfront commitment fee and a fee upon successful completion. Total fees for the service usually range from $1,000 to $2,000 per default. Before deciding this is too much money to outlay, consider the costs of not being prepared to take this course of action.
If you decide pursue this path and you are successful prior to making an application for finance, the lender will not be aware the default ever existed and you could qualify for a loan with a mainstream lender with market competitive interest rates. This could reduce the interest rate you pay by 3 to 5%. On a $300,000 loan this is an annual saving of interest of $9,000 to $15,000. This makes the fee well worth considering.
Your alternate could be to wait for up to five years for the default to be removed. In a rising market place where house prices are rising by 5% per annum, a $300,000 house will increase in value to $382,500 over a five year timeframe. Just like the previous example, considering paying a fee to have a default removed makes good fiscal sense.
Not all defaults can be removed, and therefore before proceeding with this course of action you should speak with a specialist. If the specialist determines that the default cannot be removed you may have no other option but to consider a bad credit home loan.
At Intellichoice, we've been taking care of clients for Bad Credit Loans successfully for years. Clients from Brisbane, Sydney, Melbourne, Gold Coast, Perth, Hobart and throughout Australia have been looking to us as the leaders in the 'hard to get' loans.