Effect of multiple credit enquiries on loan apps?

C

Coconutwheels

G'day All,

Have had a couple of NAB loans declined today, the NAB guy said the computer system declined and didn't have a reason. As far as he could see servicing was good LVR below 80%, both properties had been valued by the bank too. He is following up with the state manager as apparently he's the only one that can now override it. They've had the app since 14Aug and up until today its been "yeah it's all good just waiting on valuations".

Any way I'm wondering if it may be to many credit enquiries over the last 12 months. I refinanced to NAB last December, than in Feb extended the loan to cover a GF build, In July we took out a $100k LOC with CBA. We had then applied for finance on another property and a GF build with NAB and were "approved in principle". We didn't go ahead with that one, instead going for two stand alone properties but basically same loan amounts. So thats like 7-8 over the last 9 months....thats a lot right, but really should that stop them lending?

The other issue I'm thinking is I'm self employed and have not had my 11/12 financials finalised and submitted to the bank. They haven't asked for them, but maybe the computer system has a cut off date they need them by?

Cheers,
Ben
 
7-8 credit enquiries over that period of time would certainly damange your 'credit score'. There may have been additional factors contributing to it.

It usually doesn't take 3 weeks for NAB to get a valuation done (about 3-5 days in my experience).
 
Hi Coconutwheels,

If the bank manager cannot tell you then it is a credit scoring issue. It must be a pretty severe credit scoring issue too since you say it is an under 80% lend. The State manager will not be able to help you with this one because he won't know the reason either.

I would follow rolf's advice and get your credit file downloaded and checked.

What you will have to do is get a broker to look over your deal and put it to a lender that does not credit score. I have many clients in a similar position to you and I ALWAYS avoid the majors in this scenario because the deal will just die without even getting a look-in from a credit analyst.

And FYI - the fact that you haven't lodged 2011-12 tax returns would most likely have nothing to do with the rejection. Your credit score is hampered simply by the fact that you are self-employed, financials or not, as we self-employed people are considered riskier borrowers ;)
 
could be a credit score issue but might not be cause they normally crop up straight away. The bank manager will be able to tell you if it is a credit score issue but might not know exactly what cause it. Some things to improve your credit score is to list all the bank accounts you have cash in no matter how small, listing your superannuation, home contents and any other assets you may have. I have seen an application declined on credit score before cause a bank account with $500 in it was not put in the assets section and once added submitted it again and it was approved!
 
Further enquiries or re-submitting the application at this point is unlikely to get you anywhere with the major banks and will only hurt you further. Brokers do have access to very reasonable lenders who don't credit score.

Be upfront about your history because questions will be asked about it. These questions are very easily answered especially if they're disclosed in the application notes. The problem with credit scoring is the computers don't read notes.
 
Thanks for all the replies!

I'll chase up my credit file today. I have been using a broker for all these applications, for some reason all NAB apps end up in the local business banking branch and I finish up dealing directly with them anyway. Think it's time to switch to a broker that specialises more in prop investment rather than business banking.

Just to give an idea of NABs time line the first valuation was done on Mon 20th second completed late Fri 24th. I guess the local branchies then sat on there hands for a week before re-entering into the system on tues of this week. Hopeless!
 
Coconutwheels said:
Just to give an idea of NABs time line the first valuation was done on Mon 20th second completed late Fri 24th. I guess the local branchies then sat on there hands for a week before re-entering into the system on tues of this week. Hopeless!
Click to expand...

Branch staff are hopeless because they are paid regardless of whether they enter your loan today or next week.
 
Aaron_C said:
Branch staff are hopeless because they are paid regardless of whether they enter your loan today or next week.
Click to expand...

A not uncommon generalisation, but not true of ALL the branchies I work with in a collabarative manner. I would expect the slower / lazier ones would deselect themselves from working with broker partners because we can be pretty demanding for exactly the reason describe. Many brokers only get paid for what they can hunt, write,settle AND hold settled for 18 mths :)

Imagine a bank staffer being docked pay or bonus coz some loans had been clawed back

ta

rolf
 
Rolf Latham said:
Imagine a bank staffer being docked pay or bonus coz some loans had been clawed back
Click to expand...

I challenge my staff everyday to take on a more real world view about payments. They work one week, they get paid the next. Monday is payday every week without fail.

For me, Im on 90 day account with Xstrata :eek:, 30 day accounts with Thiess, Sedgman, BHP, and local Engineering firms etc are a little hit and miss with payment dates - so lets call them indefinate! :eek:

So if I invoice Xstrata on Monday 1st January, it sits in some AP chick's desk until processed on the 31st January, then I wait the 90 days and get paid on Friday the 30th April!:eek: Imagine saying to the staff that the 100hr week they did last week wasnt going to get paid until after Christmas! And when its a pretty decent amount, you have to carry that debt, and cashflow it as well over that time period.

Fun Fun!

pinkboy:cool:
 
pinkboy said:
I challenge my staff everyday to take on a more real world view about payments. They work one week, they get paid the next. Monday is payday every week without fail.

For me, Im on 90 day account with Xstrata , 30 day accounts with Thiess, Sedgman, BHP, and local Engineering firms etc are a little hit and miss with payment dates - so lets call them indefinate! :eek:

So if I invoice Xstrata on Monday 1st January, it sits in some AP chick's desk until processed on the 31st January, then I wait the 90 days and get paid on Friday the 30th April!:eek: Imagine saying to the staff that the 100hr week they did last week wasnt going to get paid until after Christmas! And when its a pretty decent amount, you have to carry that debt, and cashflow it as well over that time period.

Fun Fun!

pinkboy:cool:
Click to expand...


meh

I can beat that : )

more than once on larger comm deals the lender sits on the comm for 90 plus days so they can pay you out of "margin" but that never happens :rolleyes: and then your agg can sometimes sit on the same comm for 30 to 60 days

But the real corker for a newish business that has largeish loans, your comm cab be fully clawed back 12 to 18 mths ( and in some cases partially to 36 mths I think).

So while you are expecting 20 000 in the biz cash flow kitty this month,you end up with 5 000, all the while unknowingly trading "insolvent" :(

Larger and older businesses are somewhat cushioned by trail income, but still, an 18 000 claw back HURTS !

ta
rolf
 
Back to the OP, if someone trashes their credit file with too many credit hits - how long does it take for it to clear up? Do the banks only look at X years worth?

Jason
 
each lender has diferent criteria. Some go back a long way, some only 6 or 12 months, some dont credit score, so therefore dont mind how many credit enquiries there were previously (though they may ask for an explanation).

its also relevant what the LVR is, how strong the rest of the application is etc etc.

for instance, a FHB at 95% with 3 recent home loan enquiries might struggle with a few lenders, whereas a self employed property investor at 80% with 15 recent credit enquiries may not.
 
General rule is when in doubt, don't use a credit-scoring lender as an automatic rejection is really hard to turn into a yes (although I have done it before).
 
So I pretty much need to exchange on the second property tomorrow or I'll loose the deal......need to decide my risk tolerance.

Worst case I'd loose the deposit if unable to get finance :eek:

How do low doc loans work, how hard are they to get these days? If it had to come to that.
 
Coconutwheels said:
So I pretty much need to exchange on the second property tomorrow or I'll loose the deal......need to decide my risk tolerance.

Worst case I'd loose the deposit if unable to get finance :eek:

How do low doc loans work, how hard are they to get these days? If it had to come to that.
Click to expand...

I would advise you really talk to a broker ASAP...you can't make these kind of decisions flying blind.
 
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