The list of information on your credit file that will stop you from being approved for finance grows every year. Here’s the latest list.
First up, the biggest ‘no-nos’ for top-tier lenders aka big banks is bankruptcy. It leads to a credit score of minus 995. Bankruptcies happen when you have been unable to pay one or multiple debts. There are two types; voluntary, when you decide to go bankrupt, and involuntary, when one of the credit companies makes the decision for you. When the decision is made for you, it is perceived to be more concerning by future finance providers.\
Bankruptcies can also be discharged or not-discharged. Discharged bankruptcy means that you have been bankrupt for 3 years + and have followed all the rules related to your bankruptcy. Once 3 years have passed you are free of the obligations of bankruptcy, except for the listing on your credit file that will stay for a further 2 years. If a bankruptcy is not-discharged it means you are within the first 3 years of it, or you have not abided by the conditions of the bankruptcy. For these types of bankruptcies, they stay on the credit file for as long as it takes for the bankruptcy to be discharged (we’ve seen some that are still there 8-10 years later!).
Part 9 debt agreements will also stop you from being approved for finance. The credit score drops to minus 995. We feel that Part 9 Agreements are worse for a consumer than bankruptcy as it affects your credit history and borrowing ability and you have to pay the debts plus the administrator. These agreements are typically sold as a ‘debt consolidation’ or a way to put all the creditors together and pay them all back via a weekly payment arrangement. However, they are a form of bankruptcy and contain the same discharged and non-discharged terms.
When a bankruptcy or Part 9 Agreement are discharged it will be easier to get finance, but again, it will not necessarily be through a top-tier lender.
Court judgments, summons, writs and caveats can also show up on your credit file and impact your ability to get finance. The score will be between 0 and 500 with these types of listings. These court related issues remain on your credit file for 4-5 years, showing up every time you go for any type of finance. These are a very common reason why people are knocked back from obtaining finance.
The most common reason people get knocked back from finance is overdue consumer and commercial default listings, including serious credit infringements and clearouts. It doesn’t matter the amount or type of listing, only that it’s there. The score will usually be between 0 and 500.It is relatively easy for credit providers to default list people. Sometimes this happens within 60 days of a debt being outstanding. We have had clients who have been knocked back for typical finance as a result of $170 defaults and $2,000,000 defaults.
More and more frequently we have people calling us with no serious issues like those listed above on their credit file. What we do see is that they have applied for finance from a number of finance companies. The amount of credit applications you make and with whom you make an application plays a part in how credit scores are calculated. If someone is perceived to be ‘shopping around’ for finance, it will signal to future credit providers that there may be something that they are missing. More than 5 in a 12-month period will create concern and may result in an automatic credit application rejection.
Some of the other reasons people get knocked back from getting finance is that they have multiple names and therefore multiple credit files. They may also be a director of a company that has been through financial difficulties and the company credit score has been damaged or the company is in liquidation. If you have any concerns over your credit file or would like it checked over, call us and we can give you a complimentary assessment.
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