‘Can I Get a Home Loan with Bad/Poor Credit?’ – Your Guide to Bad Credit Loanssupport
Missed payments on credit card spends and looming debts may place you in a category that is unfit to apply for a home loan. Therefore, what happens when your bad or poor credit score is the reason for your rejected home loan by the big banks? The answer is that there are many non-bank lenders available that are not only able to settle fast, but they will be able to provide the flexibility required in these tricky scenarios.
According to Finder, one in four Australians are concerned about taking out a loan because of their credit score. Particularly with the financial climate over the past year with COVID-19 disrupting our savings, getting approved for a loan is more important than ever.
In this guide, we breakdown the quick facts on obtaining a home loan with a bad credit.
What is considered to be ‘bad credit’?
Equifax, a credit reporting agency, describes a bad credit score to be from 0-500. If you have taken out a loan of any sort, you will have a credit score report filed. You will be able to request for your credit score report for free (unless requested under special circumstances) from an online credit score provider. This credit score is calculated based on the following factors:
- any missed payments
- if you have any bankruptcies or a history of bad credit
- current outstanding bills such as tax bills/debt
- if you are an owner of a company that is facing financial hardship
- if any of the payments on previous loans were made late
- if you have applied excessively for a number of loans in a short amount of time
You will be given a score from 0 to 1,000 or 1,200. The higher the number you acquire, the higher chance you will have at obtaining a loan from a lender.
What is a bad credit loan?
Bad credit loans or mortgages can be accessed through non-bank lenders or specialist lenders that have the flexibility to consider those in sticky situations or those with black marks on their credit report. As these lenders are not confined by the restrictions of the banks’ guidelines, you will be able to have access to the funds you need for a home loan.
It is important to note that the interest rate given to you by a non-conforming bank lender, will reflect the risk they are undertaking. Expect a higher interest rate if your report is deemed significantly riskier than the average person. It may be the simple difference between examining paid and unpaid defaults. Someone that has paid defaults, will be more favourable to be given approval for a home loan as it shows initiative to pay off the debts. Alternatively, someone who has unpaid defaults will appear considerably concerning and worrisome.
Similarly to the big banks, it is best you do your research to find the best interest rate for your current financial situation. Additionally, bad credit loans are considered a short to medium term resolution. We suggest that you talk with your lender about all the options that are best for you.
How Pacific 8 Can Help You
At Pacific 8, we offer a simple and fast-tracked process to help you get the funds you need. We offer competitive rates for a number of services to suit your current financial situation. If you would like to know more about how we can help you, contact Pacific 8 to talk to one of our experience advisors.