Not all preconceived knowledge about these types of loans are accurate. The truth about bad credit home loans often misleads most potential borrowers and the general public, especially upon knowing that some are still able to get loan approval despite having bad credit scores.
As a general rule, lenders still prefer borrowers with clean credit history, but there are situations where lenders may opt to approve personal loan or home loan applications from those with rather unpleasant one.
Bad credit home loans can be a touchy topic to discuss, but in a sense, they exist. For starters, unsecured loans, for example, are available to those who are not confident with their credit scores. So basically, these are types of loans that require no collateral upon application. One might also consider low-doc loans, which require very little documents compared to leading personal loans and home loans that are commonly offered.
READ MORE: How To Get Guaranteed Approval Loans For Bad Credit Applications
Loan application with bad credit score
As a general rule, the National Consumer Credit law requires lenders to scrutinize each loan application and make sure that requirements are met before approval. This means that lenders are bound by law to strictly screen each loan application.
But this does not mean that those with bad credit scores are automatically disqualified for all loan products. There are still different loan products that individuals with unattractive credit scores can apply for.
Certains things in the person’s life can affect his ability to pay their mortgage. Events such as divorce, death of a family member, losing a job, and economic instability, among others, can hurt one’s repayment ability. Any or a combination of these events can put a person’s finance in disarray and ultimately ruin their credit rating.
The current Covid-19 pandemic, for example, has put millions of people’s credit situation into chaos. But events such as this one should not have a negative impact on one’s credit score. This means that even if some people have had their mortgage on default, certain conditions are deemed acceptable.
Know you credit rating
Most people are unsure or worse, unaware of their credit histories. It is very important that one has an updated copy of their credit assessment. In some cases, discrepancies are found in people’s credit reports--something that should have been addressed had the person paid attention to it. In the event that someone notices something’s amiss about their credit reports, it is best to address them by providing documentary evidence and have that report corrected.
READ MORE: First Time Home Buyers: Is It Wise To Get That Home Loan Now?
Just because you’ve made bad decisions in the past or been in an unpleasant situation that ruined your credit rating doesn’t mean you can have the best loan deals and rates. What matters now is you have a current source of income, assets, and minimal expenses. A good combination of these factors can increase your chance of loan approval.
If you are unsure or not confident on the accuracy of your credit rating, it’s best to consult professionals, like Intellichoice, who have been doing credit assessment professionally for years. One advantage of working with the experts is that they are trained on spotting signs of inaccuracies and they know how to correct them.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today.!