Browse Forums Home Finance 1 Jan 11, 2013 10:51 am Hi, I've just joined the forum in hopes that someone can help with advice for our situation... My partner and I are looking to buy a first home. We have 20% of our upper price range saved up, we both have permanent/stable jobs with gross income of about $105k per annum, which is increasing to $130k per annum in the next few weeks. It all looks very good on paper, except that my partner has a credit problem which we just found out when our first loan pre-approval got knocked back a few weeks back. Basically he owed $400 in an unpaid utility bill from a former rental property 5 years ago, forgot about it after he moved house, and it then went on record as a Serious Credit Infringement. Not denying that it was my partner's fault, as it was his responsibility to pay that bill and he forgot. We repaid the bill once we found out and just waiting for the utility company to update his credit report before continuing with the loan applications. From what I can gather, a Serious Credit Infringement is bad, very bad. (Though my partner didn't mean to skip out deliberately on the bill - he was careless and forgetful and also unemployed at the time, but was always contactable by mobile phone if the utility company had made the attempt to chase it up. We also set up new accounts in his name with the same company just a couple years later but no mention was made of the unpaid bill then either.) Moreover, since then I've helped my partner build up solid money management habits - together we repaid his car loan 2 years early, and have been saving up to 30% of our income every fortnight for 18 months toward our house deposit, and neither of us have any credit card debt. Our regular bank CBA is still willing to give us loan pre-approval once we've repaid the bill. But honestly I'd been hoping to get a better deal from other lenders/credit unions. I hope I can get some advice as to what our chances are and/or how best to raise the credit history problem with prospective lenders?? I'm thinking we should state outright that my partner has a serious credit infringement, this was due to his carelessness and has been repaid. Will giving proof of our saving habit help? Or is it worth it to try to get the utility company to downgrade the Serious Credit Infringement to an overdue account, given that even the customer rep my partner spoke to was puzzled because they'd not tried to contact my partner by phone about the unpaid bill? Re: Getting a home loan with lousy credit history 2Jan 11, 2013 10:56 pm Hi, his credit report has most likely been hit with a "clearout" for the utility bill. This is common for people who move homes and companies (such as utility, telco) try to contact them but don't have their new address. This will appear on his credit report for 7 years. Once paid in full, it might be worthwhile contacting the utility company and pleading your case to try and have it removed from the credit file. Give them the reasons for not even being aware of it, and if you get knocked back, keep on going up the tree until you talk to someone with some real authority. Can't hurt. Other than that, considering you will be at 80% LVR, and the smallish size of the bill, you might have a decent chance of finding a loan elsewhere. Especially if everything else to do with the loan is strong. You would need to advise any lender of the default, they will find out anyhow if you proceed. I would just have an informal chat, and advise them of the issue and find out what their policies are on defaults before applying to gauge whether it would be worthwhile or not. Don't want to keep on putting in applications and being rejected and ruining your file with too many enquiries. Cheers Tom Re: Getting a home loan with lousy credit history 3Jan 12, 2013 12:03 am plc Hi, his credit report has most likely been hit with a "clearout" for the utility bill. This is common for people who move homes and companies (such as utility, telco) try to contact them but don't have their new address. This will appear on his credit report for 7 years. I would just have an informal chat, and advise them of the issue and find out what their policies are on defaults before applying to gauge whether it would be worthwhile or not. Don't want to keep on putting in applications and being rejected and ruining your file with too many enquiries. Thanks Tom. I am confused about the credit infringement notice on his credit history though - we're pretty sure it's a "clearout", which I understand is worse than just having an "overdue payment" listing. But does that get updated to "paid clearout" once the utility company advised Veda that it's been paid? (Is a paid clearout any better than an unpaid clearout?) Will definitely keep in mind just having a chat to gauge our chances before putting in an application... Just a random question - once a bank has done a credit check for pre-approval (as CBA just did with us), will they do another credit check for the final application? Re: Getting a home loan with lousy credit history 4Jan 12, 2013 1:31 pm Log on to Veda & order your credit file. That will tell you what it is, when it was paid & when the credit default will end. I had a similar issue with Telstra & it lasted 5 years. Most banks wouldn't touch me ( except our local credit union. It did t really concern them as I had paid out my car loan years early & saved 50% of my income every month). CBS wouldnt touch us with a 10 foot pole but luckily for us suncorp gave us the money to build Re: Getting a home loan with lousy credit history 5Jan 12, 2013 2:19 pm Once a cleared default is paid, it should be shown as being paid or settled on your credit file. Yes, a paid clearout is better than unpaid in the eyes of a lender. From what I think, I doubt the same lender will do another credit check for unconditional unless the initial pre-approval lapses and you have to reapply. Could be wrong though. Cheers Tom Re: Getting a home loan with lousy credit history 6Jan 12, 2013 3:05 pm Serious Credit Infringement or paid defaults are all ok if it's under $1,000. Depending on how the rest of your file looks like i can't see any issues, but you will need to apply for a 2nd tier bank who has an open credit policy to paid defaults. Log on to Veda & order your credit file, and make sure it's clean. Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Getting a home loan with lousy credit history 7Jan 12, 2013 3:51 pm Thanks folks... We're just waiting for our credit report from Veda right now - didn't order earlier as we were waiting for the utility company to update Veda as they claimed they'd do. What, may I ask, is a 2nd tier bank? And how does one go about finding out a list of 2nd tier banks? Cheers. Re: Getting a home loan with lousy credit history 8Jan 12, 2013 4:28 pm Suncorp, ING, Citibank etc...there's a lot. To be honest no point listing them all as you need to find one that FITS your situation rather then " apply and hope for the best" I know suncorp is ok with paid defaults under $500....but doesn't mean they will say yes to your loan approval; another factors and variable to consider ...im going to sound bias, but your best to speak to a broker, if you are rejected- save the time and hassle. Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19097 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11917 The Soil classification has little to do with piers. 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