finance questions and advice

Kryton · 02-06-2006, 07:03 PM

i have a couple of things i would like to find out about finance so those in the know help if you can.
credit history: financed a car, was repoed about 2 years ago. that debt has been paid off and the bad credit file for that has apparently been lifted.

credit card: maxed out and then VOIDED by the credit company. have been making agreed monthly payments on time for about 2 years. around $5000 left to pay off. this has obviously given me a bad credit rating.

now the things i want to know. is it possible to get a bank to give me a loan so i can pay the rest of the credit card off (which will be lower interest rates for me and cheaper/easier to pay back) and would that restore my credit history back to a good status?

also i know someone else that has a BAD credit history (seriously worse than mine) and they have been approved for a $12000 loan (not from a bank) to buy a car so long as it is 2000 or newer. its a second chance thing with higher interest rates. (she isnt going to go for it either).
would the bank loan me say around $10000 (5k for credit card, 5k for a better car) with my credit history? if a bank wouldnt do it, is there somewhere else that would (without massive interest) as i can afford to do this and it would get rid of the credit card for good. even just the 5k for the credit card would help.
i work and have been in my job for 3 years if this helps.
any thoughts/ideas or advice?

Scott · 02-06-2006, 07:32 PM

I think you will struggle with th cc component. A car loan should be do-able with a creative broker as the vehicle can be used as security for a part of the loan. From recollection, your past indiscretions will be seen on your history for a number of years (3 or 5 ring a bell) and just applying for finance will reflect that someone has enquired on your rating. Denial of credit shouldn't be reported on your file however a new financier may find the fact that you have had other lenders on the job a put off.

Finance to fund finance is not a great idea unless it is making you money. Best tip is to bust your and pay off the cc as quick as you can then start to rebuild your history, perhaps with low amount store cards. Use them and pay them off immediately, these can be used as points of reference in the future.

I've been there (years ago now) and there are options, none as good as using your $$ though.

A deviant could take on their mothers maiden name and go from there.......

Racecraft · 02-06-2006, 07:50 PM

afaik it is 7 years on the sh|t list ... A bank won't touch you unfortunately so you will have to go thru finance companies and the like at the higher rates

Kryton · 02-06-2006, 08:17 PM

what if i changed my last name and didnt tell them i had a previous name? would that eventually catch up to my credit file or not and if so how long would it take to do so?
say i change my name, get all the appropriate documents, apply for a loan as soon as possible, would they still know its me?
i know its not really legal so to speak and i probably wouldnt do it anyway.

as for the finance to pay for finance.....i pay the minimum on the credit card monthly. at this rate it will be 9 YEARS before it is payed off. a loan would be less interest and would be paid off in 5 YEARS or less so it would be in my interests to finance to repay the credit card.

MO · 02-06-2006, 08:31 PM

SUCK IT UP...you have got buckley's of finance unless you lie through your teeth and then when you get found out its even worse.

I know its hard but trust me pay it out do the time and then start again.........I went bankrupt so I do know what I'm on about.

Yummy Mummy · 02-06-2006, 08:46 PM

The default from your repo'd car will still be on your credit file unfortunately, it would have just been updated as being paid in full. Defaults stay on there for 5 years, bankruptcy, part 9 and part 10's stay for 7 years.

Unfortunately you won't have much luck. The only option would be through the already suggested "creative broker" although they will probably put it through the likes of GE, and rate for risk, you will be paying for it.

As for taking another surname, if a new credit file is created, most diligent loans officers will enquire why there is a new file when you are consolidating existing debts, and there is such a thing as cross reference files, or "fuzzy matches" where the details of one person is similar to that of another. Gives the creditors a warning that there may be other files for the same person.

After all of that.....good luck with it.

Scott · 02-06-2006, 08:54 PM

^^ You have been around the block haven't you lol.

edit - Davway, no offence meant, but given your struggles in the past, more credit might be too easy an answer at the moment. Toughing it out might be timely advice.

Kryton · 02-06-2006, 09:04 PM

yeah true. i dont really want to gip the system but at the same time i dont want to be paying off a credit card for 9 years @ 11% either. i know MANY other people have consolidated their debts but im not sure how though. surely there has to be a way to do it even with bad credit. it would be better off for me if i could. i have the ability to pay what ever i borrow even if i end up on the dole. the loan would be that little anyway the weekly payments would be affordable even without work.
the credit card is the only thing i owe to anyone andin the scheme of things it isnt that big. i have paid off the car AND stuck to my agreement to do so FAULTLESSLY, the credit card has been the same. surely this has to reflect somewhere in my history?

**ebxr8240** · 02-06-2006, 09:12 PM

WHY are you paying minimm amount on your c.c ?????
What looks worse is you are thinkng of borrowing more!!!
Try Credit Union or Virgin.. But with there interest free perod PAY the
phharking card off !!!!! It's around YOUR neck and they are making big time interest...

ls f6 · 02-06-2006, 09:14 PM

Quote:

Originally Posted by davway

what if i changed my last name and didnt tell them i had a previous name? would that eventually catch up to my credit file or not and if so how long would it take to do so?
say i change my name, get all the appropriate documents, apply for a loan as soon as possible, would they still know its me?
i know its not really legal so to speak and i probably wouldnt do it anyway.

as for the finance to pay for finance.....i pay the minimum on the credit card monthly. at this rate it will be 9 YEARS before it is payed off. a loan would be less interest and would be paid off in 5 YEARS or less so it would be in my interests to finance to repay the credit card.

Davway.. as a lender with one of the big bad banks, from much experience I can say you will struggle obtaining finance at this time from a mainstream lender. None of the comments below are are personal insight to anyone, just a first person view of how lending institutions work. A bank's credit department will have two criteria for assessing applications, both which are considered equally important and both which must be 'passed':
1) The borrower's 'ability' to repay the debt: Stable income sufficient to service all borrowings, plus meet the cost of living, and allowing for interest rate increases
2) Credit scoring: A combination of credit history (ie defaults listed on credit report, numerous 'enquiries' on credit report), residential and employment stability, borrower's asset v liability position. This is in theory a measure of the applicant's 'intention' to repay the debt.

With credit reports, the credit reporting agency, Baycorp Advantage, use data matching, ie date of birth, first name, surname, current and previous addresses and employers. Therefore, if you merely change for example your surname, the data check would still bring up your correct credit file- and raise further questions. Defaults are listed on your CRAA or credit report for 5 years - if you have paid the default in full, it will show up as a 'paid default'- but it will still show up for the 5 years. Of course, this looks much better to a prospective future lender than an unpaid default. Any default will show up as a 'flag', and for unsecured loans, or loans secured by a depreciable asset such as a vehicle, finance is very difficult to obtain when a paid or unpaid default is present. This is because lenders view 'past behaviour' as the best indicator of the likelihood of future default.

You may have a shot if you are upfront about your past troubles, and if you have a valid reason for the default which can be proven and shown to be no longer applicable (eg. an injury which prevented you from working for 12 months, as opposed to just borrowing way over your head or quitting your job and going travelling). The lender will want to see evidence of continued debt reduction or savings growth over a period of at least 6months plus.

However, asking for finance to repay the existing debt, and then asking for further funds to upgrade the car would probably not be sending the right signal (ie you would be better off trying to prove your creditworthyness by getting rid of the existing debt as a first priority, then seeking car finance once this debt is paid off).

One further option, if there is plenty of income to service the debt and the 'credit score' is the only issue holding you back, is to offer a guarantee from a 'clean' third party - although even this can be difficult as the 'Code of Banking Practice' (well intentioned industry guidelines which aim to protect consumers but really just makes life hard for them) dictates that the third party must be gaining a benefit from the loan - eg. a spouse, partner or parent who shares household expenditure and thus would benefit from either lower repayments or faster debt clearance.

There are lenders who will advance funds to those with poor credit history, but only because the massive interest rates they charge the borrower are sufficient to absorb the inevitable higher proportion of bad debts that result.

Kryton · 02-06-2006, 09:36 PM

you say: "- if you have paid the default in full, it will show up as a 'paid default'- but it will still show up for the 5 years."
is that 5 years from AFTER you have paid it or 5 years from after it has been listed as bad credit (ie: repoed car).

at the present time im just looking at my options. i really dont want to get into debt again unless it benefits me ie: paying off the credit card with lower interest than what i am already doing.

could you also tell me more about "credit scoring"? my friend got 115%......out of what? how good or bad is this?

ls f6 · 02-06-2006, 09:57 PM

5 years after the date the default was first listed.

re. credit scoring - each institution has their own methods or weightings. The 115% for the lender may have referred to 100 being a neutral score (or a pass mark for their own internal scoring), 0 being a terrible score and 200 being an exceptional score. And the lenders often review their own settings over time depending on their apetite for risk and market share.

As a general rule, time in current (and/or previous) employment of 2/3 yrs+ is scored highly, as is similar time in current residence, time in employment industry, high assets v liabilities. Being low in one area can be countered by a high score in another. However, defaults are generally 'gatekeepers'. But as I said before, if there was a genuine 'one-off' reason for the default, it is not necessarily the end of the world.

It all comes down to the risk of the transaction. Eg. someone borrowing $250,000 secured by a $500,000 residential property, with good income, is not going to be greatly affected by a negative computer generated credit score, because the risk to the lender negligable compared with someone borrowing without security, or with a volatile security.

If you want to get your hands on your Baycorp Advantage credit report (without triggering a lending enquiry), you can get it free by ordering it at :

http://www.mycreditfile.com.au/home/home_default.aspx

This will show any enquiries by lenders, telecommunications companies, defaults lodged (paid or unpaid)...

PHATXR8 · 02-06-2006, 10:08 PM

Myadvice:
Pay off the credit card as quickly as you can. By paying off the minimum you are simply prolonging the agony.

Drop most of your pay onto the credit card every week/fortnight/month and use the card to buy whatever you need to live. By paying the minimum repayments only you will never get anywhere....that is the way they design creditcard payment regimes...so you never get ahead.

Pull your head in for a few months and you will debt free before you know it.