FINANCE DO’S AND DON’TS

FAQ's - we have put together some of the most commonly asked queries. Of course, these are general answers, which don’t take into account your specific circumstances and should not be taken as financial advice.  

Tips to follow BEFORE applying for finance  

• Keep your credit inquiries to the very minimum (yes that includes Mobile phone accounts, car loans, credit card, etc). Most lenders will decline loans after 3 inquiries; they don’t like to see a busy credit file.
• Do not withdraw cash from a premises that has poker machines, it is far better to withdraw cash from your grocery store or your bank's atm.
• Always make sure you supply the correct information (including any current credit - store cards, credit cards, personal loans, etc).
• Normally lenders will want a full profile of the applicant. Details they want to peruse are the current and last 2 full tax reporting years income, last 2 payslips (full details - not a summary), and employment history, your last 5 years place of residence history, original or certified copy of your current drivers licence details, date of birth, and proof of current address. However, some of these things will only be required at sign up once the loan has been approved. Failure to provide them could result in the finance approval process not proceeding until these details are provided.
• It always helps to apply for finance before changing your job, or residence, or birh of a child, and not after.  

Tips about defaults  

Q: If I have defaults on my credit file does this mean I won’t get a loan?  

A: The short answer is NO – but it does make it harder to get and limits the number of lenders that we can approach. 

• It will depend on how many defaults and with whom (i.e. utility defaults or finance company defaults). 
• How long you have been in your residence is also relevant (as finance companies dislike instability). In the eyes of the lender, instability can lead to defaults. If you do change address always notify the lender, phone company and public utility etc. as this will help to ensure you don’t miss bills and will alleviate problems down the line. 
• Once a default is on your credit file it will stay there for at least five years whether it is paid or unpaid. If you have defaults on your credit file you should pay those as soon as possible, lenders like to see that where there was a mistake or problem you fixed it quickly.  

Q: Can I get a loan if I’m bankrupt? 

You may be able to get a loan if you are a discharged bankrupt or even if you are currently bankrupt. Keep in mind you will be more limited in terms of the lenders you have to choose from and the fees and rates will also be considerably higher on bankrupt loans. You may also be required to attach an asset as security or apply with a guarantor. Find out about your loan options below and see what you might be eligible for.  

Before you apply for a loan while bankrupt…

• As your assets and income may have been severely effected by bankruptcy, deciding whether or not you can afford the repayments is an important consideration. What will your repayments be and how will they work with your budget? 
• Applying for a loan when you’re in any challenging financial situation isn’t a decision that should be taken lightly. This is especially true when you are bankrupt. Consider why you are taking out the loan and if there is any other way you can pay for what you need. Do you have approval from your bankruptcy trustee?
• Speaking to a free financial counsellor might be an option for you to consider before you apply for any financial product. You can give one a call on the National Debt Helpline 1800 007 007 who will put you in contact with a counsellor in your area.

Tips about loan repayments  

If at any stage you have trouble paying your loan always keep the finance company informed. Good communication makes a difference. Discuss the matter with the finance company and they may be able to help, for example by extending the loan, lowering the repayments or offering you other terms to assist you with your current hardship. Lenders are real people too, and they do not like to hassle their clients unnecessarily - as they want these people to be ongoing customers.

Tips for a Good Credit Rating  

Always pay your loan on or before the due date. If you have a credit card with a limit of $500 and it’s due on Monday and you pay it on the following Thursday (because that’s when you get paid) that will give you a bad credit rating – so always make sure make your payments on time. If you are renting and continually paying your rent after the due date - you will get a BAD rental record which can effect your ability to rent a home. Most people do not realise that a great rental record can be used by some home loan lenders to substantiate a "genuine" savings record. A loan or rental record should run for at least 12 months to establish a sound loan on-or-before-time repayment history. If you combine these factors you will be well on the way to having and/or maintaining a good credit score.  

At RedCap Finance Brokers (EZ Finance) we aim to get you the most competitive loan based on your personal circumstances and financial behavior from our panel of lenders.