Bad credit home loans can often feel like a fruitless search, particularly if you’re looking to buy a new house, refinance, or just get on the property ladder as a first time buyer.
You know that the chances of owning your own home with your current financial issues are slim, but a lot of the financial difficulties you’ve faced are through uncontrollable life events.
You might have suffered a sudden job loss, been through a tough separation or divorce or experienced a debilitating illness, such that you find you were no longer able to keep up with all your financial commitments.
There is, however, a light at the end of the tunnel. There are a number of lenders across Australia that have mortgage products for bad credit borrowers, no matter what their credit history might say.
These types of products are often referred to as “non-conforming” home loans, and can provide great flexibility in lending conditions.
Our guide below will take you through the process of how can you can get your bad credit home loan approved and other strategies to improve your credit score.
Understanding Bad Credit
It’s important that you monitor your credit score yourself, so that you stay informed and understand what each listing means.
Depending on the type of listing and how many you might have, it could reduce the chances of you getting a standard-type home loan with a lender significantly.
Bad Credit File Listings:
#1: Unpaid bills.
These will lead to a bad credit history faster than you can say “super-cag-a-fra-ga-listic-ex-pl-a-docious”! Keep on top of your payments and if you can’t, then communicate with the companies involved so that you can come to some type of payment arrangement that will stop these being listed on your credit file.
#2: Late payments.
These can affect your credit history, they won’t have as much of an impact as an unpaid bill. In fact, you can often get these removed from your credit history if you speak with the company involved and provide them with a valid reason why you were late.
#3: Prior credit rejections.
If you’ve been applying for home loans, personal loans or credit cards recently and have been declined, this can reflect badly against your credit file. While they may be innocent, as in you decided not to go ahead, a lender reviewing your file would see this as a red flag.
There’s no avoiding this one. If you’ve been declared bankrupt, it will provide you with a bad credit rating and will remain on your credit file for between 5-7 years. And even if you have been discharged, your name will stay on a Solvency Index, which lenders have access to anytime they want.