HOW TO GET OUT OF A BAD FINANCIAL SITUATION AND CLAW YOUR WAY BACK TO FINANCIAL INDEPENDENCE.
If you are being rejected for loans because of defaults, judgements, past bankruptcies, or a poor financial position, then you are in a bad financial situation. How you get out of that situation will depend on what action you take, and how much strength of character you possess.
Everyone, absolutely everyone gets into a stressful situation because of money at some point in life, but if you are smart and prepared to work at it you will work through the problem. The biggest difficulties are experienced by those who for some reason cannot stop themselves wasting money on alcohol, drugs, gambling, mobile phones, excessive generosity, or impulse buying. Some people just buy "stuff" that is useless and unwanted. It may make you feel good for a short time, but then it is put away and never used again. Many seemingly useful kitchen appliances also fall onto that category. Anyway enough of the lectures, lets look at a few case studies and what strategies you can use to get back on top of the situation.
I AM YOUNG SINGLE, EMPLOYED, AND CANNOT GET A CAR/PERSONAL LOAN - Lets look at the situation where someone has a reasonably well paid job, but they cannot get a $10,000 loan for a car or other personal expenditure. Lenders look for stability of employment, an address that doesn't constantly change, your credit record, and how you manage your finances. If you have maxed out credit cards, change your job every 6 months, change your home address often, then you won't get a loan. Past experience has told them that is exactly the profile of borrower that becomes a problem for them. They move house often, phone numbers change, mail doesn't get forwarded on, and if problems arise, they can't get in touch with you. When you change jobs loan payments will be missed because of a gap in income.
You may be the most trustworthy person in the world, but you won't get a loan until you stabilise your employment and domicile. How do you overcome that? Easy, find a job that you like and stick at it, and also stop moving house. This may not suit the lifestyle that you are looking for, but it will get you a loan. If you have credit cards drawn to the limit, stop spending money on "stuff" for several months and you will be surprised at how much you can save or pay off your cards. By taking that action you should be able to get yourself into a position where you will be able to get a loan in about 6 months. One warning though, don't apply with every lender possible each application creates an enquiry on your credit file, and that will give your credit profile a look of desperation that won't help your case.
I HAVE TWO SMALL DEFAULTS FOR MOBILE PHONES - We get this all the time unfortunately. The best advice that I can give you is to immediately pay the defaults, and make sure that further defaults do not occur. Mobile phone companies are entitled to record a default once your account becomes 60 days in arrears, and unfortunately they will that default immediately. Once on your file it will take 5 years for that default to be deleted from your file. Life is a serious business, you only get one shot at it. Make sure that you don't put obstacles in your path just because you didn't tell your phone company about a change of address and as a result not pay what may be quite a small account. If you are looking for a personal loan of $10,000 then two small defaults will be enough to stop you from getting the loan from most banks. The lender may accept one small default if you give tell them upfront, and give them a plausible reason. Other than that they will tend to disregard the defaults if they were paid quickly, occurred a few years ago, and you have well conducted credit cards and savings. Do that and in time all will come good for you.
I HAVE QUITE A FEW DEFAULTS, AND SOME ARE LARGE UNPAID LOANS TO FINANCIAL INSTITUTIONS - In my experience there are two types of people who have defaults. The 1st type are good people who get into a bad financial situation through an oversight, or they just made a couple of errors and are trying to rectify their mistakes. I suggest that you make arrangements with your creditors (the person that you owe money to) to stop charging any further interest, in return for regular monthly or fortnightly payments. Make sure that you negotiate a payment that you can adhere to, so allow for some regular savings to give you a buffer when things go wrong. If you stick to the agreed payment structure then they will honour their side of the agreement. At some point they will approach you and offer a settlement of the debt to get it off their books. That is where your small savings may come in handy. If you don't have enough to pay them out, tell them what you are able to pay and you may find that they will settle for that. You never know what they will accept until you try. This is a long road but in the end you will be back on track and lenders will trust you again, but it will take a few years.
The 2nd type of person is the one who thinks that they are clever and they have no intention of paying their defaults. They are wrong of course, they are not clever but just plain stupid. They may get away with a few small unpaid loans, but because of that they will never be able to borrow for a house or any of the important things in life. Financial institutions have a system, it may not be perfect, but if you intend to be dishonest in your dealings then you are outside the system and lenders will not want you as clients. My best advice for you is to mend your ways immediately or face a very uphill battle for the rest of your life. The people who most successfully negotiate the financial hurdles in life are those who know and understand the system, and are honest in all of their ways. We all make mistakes but never make the mistake of being a type 2 person.
I WOULD LIKE TO BUY A HOUSE BUT HAVE DEFAULTS ON MY CREDIT RECORD - If you have up to 2 small defaults (especially if they are phone company defaults) then home lenders tend to disregard these if they are less than $1000 in total. It will stop you from getting a 100% Home Loan (not currently available) but other products such as a 95% home loan, and even a 97% loan may be possible if you have reasonable savings. Now that I have mentioned savings, I should say that the best way to demonstrate your ability to manage your finances is to save regularly. Many people that we encounter are convinced that they should get any loan and repay it to show lenders that they are financially responsible. Ask yourself "Why would a lender be impressed with someone who borrowed money at high rates to buy something that they probably didn't need" It can help if your payment record was excellent and no payments were missed or late, but the use of payday loans or other high interest loans just gives your profile a look of desperation.
Lenders look at all of your past financial dealings, but they are most impressed by savings.
Lenders look for your bank account statement to show a regular wage going in and some savings left in the account each time to gradually accumulate good savings. This shows the lender that you earn more than you spend, and you can control your urge to blow your savings on "stuff" that you don't need or want. To a lender your bank statement is like a book that they can easily read. Almost everyone uses a plastic debit card at every store when they make a purchase. Take a long hard look at a few months of your own statements. It will show how much you spend on food, clothes, lifestyle, alcohol, gambling, etc. If your statement shows numerous alcohol purchases or gambling venues it puts your application in a negative light. People who drink to excess, gamble heavily, or spend too much on fashion etc. create problems that lenders don't need. Either change your habits or withdraw cash so that your negative spending habits do not show. Stay away from expensive sources of credit such as payday loans, it will cost you too much and really won't help your case at all.
I ALREADY OWN A HOUSE BUT HAVE GOTTEN INTO TROUBLE, CAN YOU GET ME OUT OF THIS MESS? - In all probability yes, we can get you out of the mess. Because you have a strong asset like a house behind you, we do have lenders who will lend at reasonable rates as long as we can demonstrate to them that you will be able to meet all of your commitments, and that whatever caused the problems is in the past and won't re-occur. We are experienced at packaging a loan application and showing it in its best light. If necessary we can negotiate debts with unsecured lenders and put all debts under the one payment against your house making your life a whole lot better financially. if you would like us to look at your scenario complete an application and tell us about your situation. There is no charge and we don't perform credit checks unless necessary, and in those cases we ask for your written permission first.
WE ARE HERE TO HELP YOU... Just click on the blue “APPLY NOW” button below and fill out our easy to use home loan application form. We will then analyse your situation and discuss your options by telephone with you. There is absolutely no cost or obligation to get this assessment. Don't let your defaults or bad credit stop you from getting your home loan.