My chances of getting a bank loan

[Bison]

Hi All

I am looking at getting a homeloan in the next 6 months but I have a fear of getting turned down. I got my credit file from Veda yesterday and it seems pretty clear but I'm not sure if thats what people see when looking through my credit history

I'll give you a brief description of my credit history, and then tell you how my credit file reads.

I was usually really good after turning 18, I worked casual then moved into full time with no real responsibilities. I applied for a phone with Vodaphone and got it, and paid all my bills on time until my 2 year contract expired.

I applied for a personal loan through ANZ and was knocked back because I didnt have any assest (loan was for 20k). I applied for a credit card through ANZ and was rejected.

I applied for a credit card though CBA and was accepted with a 4k limit. It wasnt long before this was maxed out and I got 'lazy' with the repayments. I would just forget about them for a month, then pay them when I was reminded. I asked for a higher credit limit and recieved to to 6k and maxed that out soon as well. I then got a little lazy and missed some payments but got into some money and paid the whole thing off in about 2009.

I then maxed it out again and missed a couple of payments and the card was cancalled and I was threatened with a default notice but dont think I recieved one. I have since been paying off the balance gradually but making each payment per month on time. I could wipe the balance clear in about a month if I put the effort into it. Balance is currently 4k.

The balance will be clear before I apply for a home loan. I have one bank account which is very active, lots of money in and lots of money out. I have another account in which I have been saving over about 6 months consistantly, enough per fortnight to cover a 300k home loan, but I can easily afford more.

I earn over 90,000 a year full time.

My credit rating doesnt appear to have any red marks, but I dont know if thats what the banks see? I got it from veda.com. I states all 4 times I applied for a loan but doesnt say whether i was accepted or not, nor the amounts. It states I have no current credit providers which is currect and no overdue balances. No agent enquiries or anything else.

Is that a good thing or are there still able to dig deeper and see that I've had a credit card blue? How bad was my original mistake and how wll it affect my homeloan, if at all. If I get the loan through a different bank (the current bank I save with instead of the bank I had the CC with) will it increase my chances or can any bank get the CC info from another bank.

Thanks for the info, just want to know what to expect and if theres any extra work or time I need to do before applying to help my chances. Feel free to ask any questions to make my situation clearer.

 

[Leper]

Bright enough to earn $90k+ but foolish enough to carry thousands in (likely high interest 20%+?) credit card debt and defaulting on payments for same "because you got lazy" and without a razoo in the bank (assumption - otherwise why would you carry a cc debt)?

Come back when you've saved $50k deposit (min - $100k would be better), and done a budget to show you understand your ins and outs and the costs of purchasing such as stamp duty, legals, etc) is what i'd say if I were your bank manager.

 

[Bison]

Bright enough to earn $90k+ but foolish enough to carry thousands in (likely high interest 20%+?) credit card debt and defaulting on payments for same "because you got lazy" and without a razoo in the bank (assumption - otherwise why would you carry a cc debt)?

Come back when you've saved $50k deposit (min - $100k would be better), and done a budget to show you understand your ins and outs and the costs of purchasing such as stamp duty, legals, etc) is what i'd say if I were your bank manager.

Ive always had liquid cash available, I've worked everday since leaving school and its how I have an above avg salary now. You dont need to be smart to earn a decent wage, you need to be a good worker. I also dont work in finance lol easy to be smart at one thing and not another

Its more forgetfullness than lazy. I would get the statement and note the date of payment for example 12 of june, then on the 20th of june I'd think "oh didnt I have a payment due? woops". Its really that simple, because I wasnt using the card when it was maxed out it wasnt really in my mind. When I was using it I always made payments on time.

In re to the deposit, which I am currently saving for (i was planning on saving 40k which I am on track for, but if I need another 10k I could knuckle down for an extra few months) but i know of several people who have borrowed over 200-300k with smaller deposits than 50k. Is it because of my previous debt that I would be required to have a higher deposit?

Also, judging by your response theres no way that this wouldnt come back to bite me? Even though it doesnt turn up on my credit check then there are still other ways for banks to find out my history?

 

[Lyyynnnchy]

You'll get one easy. Make sure you go through the steps to make sure you'll be fine though ie go to a broker with your account statements, payslips, credit file etc. Getting turned down for a home loan doesnt look great and banks can definitely see your rejections.

 

[Jade's]

I work for a major bank and I think you will be fine. You may have issues if you go through the bank that you didn't pay the credit card with de to poor account conduct but otherwise you will have no problems. With regards to the deposit you can get a loan with much smaller than 40k however if the loan exceeds 80% of the value of the house you are buying they will make you pay mortgage insurance. The other option is to have someone guarantor your loan for you who trusts you will make repayments and use their house as collateral

 

[year of the roo]

If you don't ask, you don't get.

So... ask.

 

[ThePezDispenser]

Leper was being generous. What you're doing is just stupidity!

You still have cc debt, yet you're in a position to place a deposit on a house?

Large sums coming in and out of your account? The bank will think you're either into drugs/alcohol or gambling!

 

[Visions]

In my role as a broker, I've had clients like you. They have forgotten to pay things on time, they have moved house but haven't notified the relevant phone company, etc and bills are still sent to the old address and are left to lapse. The key thing in the end is the credit file, and whether as a result of these "errors of judgement", defaults or judgements have been added to it. In your case, you say that they haven't so you are fine. The only other issue that might occur with a credit file is the the number of inquiries that it has, and whether there are too many. Reason being is that if you have say made 3 inquiries for a credit card in the space of 3 months, lenders will frown upon that as they will automatically assume that you have been rejected every time and won't want to risk it (whether or not it may actually be the case). Rule of thumb is normally no more than 2 of the same type of inquiries every 6 months.

However as Jade's mentioned, you wouldn't want to apply with ANZ or CBA, as they can actually trace your history and it wouldn't bode too well if they saw you were rejected or fell behind in payments, even if it was years ago.

In regards to the loan itself, with an annual wage of $90K, you won't have an issue with servicing a loan of $300K at all.

For a deposit, some lenders still do 5% minimum (with 95% lend) but most do 10% minimum (with 90% lend). Whichever case it is, they all require that you must have at least 5% genuine savings that has been saved in a bank account for the previous 3 months (in your case $15K). You must also realise that you need to have the stamp duty and other costs associated with the purchase also handy, which is around $10K on a $300K property.

Jade's also mentioned the LMI which can be a few thousand dollars, however that can be capped on the loan if need be.

That covers most of it, if you have any specific questions, just PM me.

 

[tzmnetwork]

i dunno how should i start this, i am really mad today. after working as accountant in a small wholesaler company for 3 years ive realized im a complete idiot all these while. one of our long-term client finally close its business for good, the reason is because its no longer need its "service".

you probably dont get it, but our wholesaler company all these while is "selling" the product to this company, and they refuse to pay. i dunno what the client is dealing with the ceo of our company, they only pay minimum of 30% from each shipment and by that contract, we will continue to supply to them

today, one of the employee from our client came to my office and asked me out for a cup of coffee, since hes out of job due to company bankruptcy, he did enquiry if my place have any vacancy, im not sure but i'll figure out after chat with human resource dept.

i asked him what happened to his company, why filling bankruptcy? he said its just a drama, im completely clueless. he start saying by actually between our business deal, my company has to keep "selling" to em so that there are record and proof business sales apparently is "going on", since they're purposely paying minimum, our company eventually went into debt (but with good sales record) and our company will keep applying new business loan from bank.

this new loan money used to keep the company "in operation" while our client company actually just pretend to buy from us, they use another courier to ship our own stock back to our company! lol this was looking like our purchasing dept is buying new supplies as there is "business" going and it just keep circling around.

he said the operation cannot continue because apparently there is dispute among the executive level due to money missing, i heard one of the mgmt level employee has gambling problem. so all these while im a complete idiot helping the company with its 'fake' accounting that i thought it was real! help! what should i do?

i havent tell anyone in the office yet, because at the moment im the only one manage the account

 

[Slax]

Pretty much agree with what Visions said. The bank will require evidence of at least a 5% deposit in cash savings, saying you have liquid assets is not going to be enough they will demand proof.

I'd also recommend that you get your credit card in order. Having a $4K debt and only a $6K limit will suggest to any lender that you don't manage it well. If you even get it down to $1500 it will look a lot better.

Another issue will be employment continuity. If you have moved employers consistently over an extended period (ie. no more than 1-2 years with any employer) that will go against you in a big way.

 

[Visions]

Pretty much agree with what Visions said. The bank will require evidence of at least a 5% deposit in cash savings, saying you have liquid assets is not going to be enough they will demand proof.

I'd also recommend that you get your credit card in order. Having a $4K debt and only a $6K limit will suggest to any lender that you don't manage it well. If you even get it down to $1500 it will look a lot better.

Another issue will be employment continuity. If you have moved employers consistently over an extended period (ie. no more than 1-2 years with any employer) that will go against you in a big way.

The outstanding balance of a credit card is more of a factor to the user and their discipline in containing it than to the lender. It really doesn't matter what the balances are, the lenders take the card limit for serviceability. So you could have a card limit of $10K with a balance of $200, but the lender will still assume that you can max out the card and use that as the defining factor.

Good point with the employment continuity. Lenders like stable employment, and won't lend to clients who have worked at a place less than 3 or 6 months (differing policies between lenders) or are still on probation, so if you just recently found work or changed jobs, you won't be getting a loan.

 

[Leper]

i dunno how should i start this, i am really mad today. after working as accountant in a small wholesaler company for 3 years ive realized im a complete idiot all these while. one of our long-term client finally close its business for good, the reason is because its no longer need its "service".

you probably dont get it, but our wholesaler company all these while is "selling" the product to this company, and they refuse to pay. i dunno what the client is dealing with the ceo of our company, they only pay minimum of 30% from each shipment and by that contract, we will continue to supply to them

today, one of the employee from our client came to my office and asked me out for a cup of coffee, since hes out of job due to company bankruptcy, he did enquiry if my place have any vacancy, im not sure but i'll figure out after chat with human resource dept.

i asked him what happened to his company, why filling bankruptcy? he said its just a drama, im completely clueless. he start saying by actually between our business deal, my company has to keep "selling" to em so that there are record and proof business sales apparently is "going on", since they're purposely paying minimum, our company eventually went into debt (but with good sales record) and our company will keep applying new business loan from bank.

this new loan money used to keep the company "in operation" while our client company actually just pretend to buy from us, they use another courier to ship our own stock back to our company! lol this was looking like our purchasing dept is buying new supplies as there is "business" going and it just keep circling around.

he said the operation cannot continue because apparently there is dispute among the executive level due to money missing, i heard one of the mgmt level employee has gambling problem. so all these while im a complete idiot helping the company with its 'fake' accounting that i thought it was real! help! what should i do?

i havent tell anyone in the office yet, because at the moment im the only one manage the account

I have a beautiful 3 year old daughter who can express herself far more eloquently than the above indecipherable rant.

 

[Lensen]

The outstanding balance of a credit card is more of a factor to the user and their discipline in containing it than to the lender. It really doesn't matter what the balances are, the lenders take the card limit for serviceability. So you could have a card limit of $10K with a balance of $200, but the lender will still assume that you can max out the card and use that as the defining factor.

Good point with the employment continuity. Lenders like stable employment, and won't lend to clients who have worked at a place less than 3 or 6 months (differing policies between lenders) or are still on probation, so if you just recently found work or changed jobs, you won't be getting a loan.

You'd be surprised how much a higher balance near a card limit can affect a credit score

 

[Visions]

You'd be surprised how much a higher balance near a card limit can affect a credit score

So what's more dangerous to the lender, a person who has a $1950 balance on a $2000 limit, or a person who has a $6000 balance on a $15K limit?

I have no doubt that it affects a credit score, but if the rest of the application doesn't have any adverse situations and can service including the credit card, it won't fail because of that.

 

[Lensen]

So what's more dangerous to the lender, a person who has a $1950 balance on a $2000 limit, or a person who has a $6000 balance on a $15K limit?

I have no doubt that it affects a credit score, but if the rest of the application doesn't have any adverse situations and can service including the credit card, it won't fail because of that.

If it's on the bank's own systems, then I've got no doubt that a continual balance of $1500-2000 on a $2k limit is a far riskier proposition than someone who goes $0 --> $10k --> $0 on a $15k limit every month.

But purely in terms of credit scoring, I've seen it myself as assessing loans is what I do for a living - I've had applications where an initial assessment of a balance of $3k on a $10k limit passes OK, then we get teh evidence in and it's actually $6k balance on a $7k card and it turns to a system decline.

 

[Visions]

If it's on the bank's own systems, then I've got no doubt that a continual balance of $1500-2000 on a $2k limit is a far riskier proposition than someone who goes $0 --> $10k --> $0 on a $15k limit every month.

But purely in terms of credit scoring, I've seen it myself as assessing loans is what I do for a living - I've had applications where an initial assessment of a balance of $3k on a $10k limit passes OK, then we get teh evidence in and it's actually $6k balance on a $7k card and it turns to a system decline.

That's interesting to know, I wouldn't have thought it was that sensitive.

Why was a copy of the credit card statement given as evidence? I have never been asked to give a credit card statement unless it was part of a debt consolidation (which in that case there is no use giving incorrect figures as the lender will see exactly what the client has).

 

[Lensen]

That's interesting to know, I wouldn't have thought it was that sensitive.

Why was a copy of the credit card statement given as evidence? I have never been asked to give a credit card statement unless it was part of a debt consolidation (which in that case there is no use giving incorrect figures as the lender will see exactly what the client has).

We often get over-eager brokers who send more in than needed - I wouldn't require it but I'm also not going to discourage if anyone wants to send them in, the more information the better IMO

 

[HBFlanker]

Does it actually matter if you miss a credit card payment by 1 day? I have a really small limit and sometimes the monthly payment is like $30 and I have forgotten twice. Surely this won't affect my ability to get a home loan in the future

 

[year of the roo]

Does it actually matter if you miss a credit card payment by 1 day? I have a really small limit and sometimes the monthly payment is like $30 and I have forgotten twice. Surely this won't affect my ability to get a home loan in the future

I think you're in trouble now. Maybe look into caravans instead?

 

[Dan Moody]

Does it actually matter if you miss a credit card payment by 1 day? I have a really small limit and sometimes the monthly payment is like $30 and I have forgotten twice. Surely this won't affect my ability to get a home loan in the future

In the scheme of things, no not really. As long as it has actually been paid with a week of falling due and your card is kept under its limit.
When you do go for a loan, you have to produce card statements, bank statements etc. for the last 6 months. If you know you are going to go for an approval in principle, keep your accounts in order for at least that 6 months.
Do not let any payments of any kind go into default. This means credit cards, phone bills, electricity, gas, water etc. A default is very hard to explain when trying to get a loan approved.