How many people can not get a normal bank loan?

[Hysteria]

How often do you brokers find that someone has a bad credit file and can not get a bank loan? Just curious as what would be % of people that can't get a loan from a normal lender. Out of every say 100 loan applications would it be 2%, higher?

Is it normally caused by someone not paying there $100 phone bill etc?

Is there certain areas across Australia that seem to have bad/higher credit history?

Thanks

 

[Aaron_C]

It's quite common. I'd say 1/10 people actually. But it doesn't stop them from getting a bank loan as usually there's an explanation.

 

[Sunfish]

It's quite common. I'd say 1/10 people actually. But it doesn't stop them from getting a bank loan as usually there's an explanation.

So almost anyone can get a bank loan, regardless of history? Now I am happy I don't buy bank shares.

 

[Marty McDonald]

You do see it a fair bit. Usually people in their late twenties and early thirties who moved a lot a few years b4 settling down.

I think the whole system needs a revamp though as the most common cause is moving house and bills not getting to the new address. The stupid electricity company or whatever sends a couple of letters then bam default. They should be trying the bloody mobile phone or email address which they dont.

That said it quite often comes down to the borrower being a bit slack in general. So it does go to character a bit. I find people with small defaults are the less organised people in general (not always) but is a definite trend.

My guess would be the % with small defaults would be say 5%.

 

[Marty McDonald]

Don't worry sunfish I have had 2 declines due to small defaults in the last 2 months you are safe. One was at 80% lvr but with a family guarantee. The other at 95%. Very hard to get through above 80% unless just 1 really small one years ago.

 

[Peter_Tersteeg]

Bad credit is probably below 5% for me. Most of the loan declines I experience are due to bad credit scoring. These are a pain in the neck, but can usually be addressed once the problem becomes known.

 

[Rolf Latham]

Less than 2 %


Its rare for a borrower not to know they have some sort of issue before or when they speak with you .

If in any doubt, we will always chase a CRAA report from the client, since there is usually no point writing a loan that wont settle.

Its no good for the clients file, and the cost to our business is a preventable blow out.

On that basis, this is a win win : )

t
arolf

 

[Macca]

Considering that CRAA reports from Veda are free, maybe a way for MB to save wasting time by suggesting that people get a free report during the first interview.

Or is this already standard practice ?

 

[Rolf Latham]

Considering that CRAA reports from Veda are free, maybe a way for MB to save wasting time by suggesting that people get a free report during the first interview.

Or is this already standard practice ?

Hi Macca

Some of us have the Veda Service "in house" but are loathe to use it, since in some credit scoring models, our enquiry adds another to the the clients file, and that could break the "camels back".

Generally we suggest, that if there is any doubt, or a client has a busy file, to grab a copy from some agency.

the free version can take 2 weeks, and most folks dont have that sort of patience.

Around 40 bucks and the client has it in 24 or less

ta
rolf

 

[Peter_Tersteeg]

Some of us have the Veda Service "in house" but are loathe to use it, since in some credit scoring models, our enquiry adds another to the the clients file, and that could break the "camels back".

Had exactly that problem yesterday. A few months ago the client met with a builders sales person to figure out a construction contract. The sales guy does mortgages as well and ran a credit report prior to the meeting without permission from the client. Nothing proceeded from the meeting.

A month later, the client has a building contract with another builder and yesterday I submit a 90% application. 3 hours after that I get a call from the lender saying the application is unlikely to meet the mortgage insurers criteria as applicant has made 4 credit enquiries in the last 6 months, one of which he had not knowledge of. All the others were disclosed in the original application.

At this point I've got to try pick up the pieces and mitigate the enquiries. There's an 80% chance that the applicaiton will fail. By submitting the application to the bank there's another credit equiry reducing the chances of success with an alternate lender.

 

[Macca]

Hi,

I am thinking more along the lines that anyone can get their own Veda report without showing as a credit enquiry.

They then show this to their MBs as a guide when making loan enquiries so that everything is disclosed up front.

I suppose if they wanted a free one then this would require the client to be organised wouldn't it

 

[Aaron_C]

That's terrible Peter. They really do need to reform this system as it's just ridiculous.

 

[Peter_Tersteeg]

Aaron it definitely stinks and is a reason why I refuse to do credit reports for clients. My experience is that it's more likely to hurt them than help them.

Getting your own credit report done is definitely a good thing for borrowers.

 

[Player]

..............Getting your own credit report done is definitely a good thing for borrowers.

Agree Mr. Bear. You never know what goes on until you are in the throes of securing new loans or even a re-fi, as I found out

http://www.somersoft.com/forums/showthread.php?t=72652

 

[kathryn d]

Had exactly that problem yesterday. A few months ago the client met with a builders sales person to figure out a construction contract. The sales guy does mortgages as well and ran a credit report prior to the meeting without permission from the client. Nothing proceeded from the meeting.

In Canada we are required to give written permission for someone to run a credit check. This not the same in Australia?

 

[Rolf Latham]

In Canada we are required to give written permission for someone to run a credit check. This not the same in Australia?

yes...............but

hungry sales people forget about what is right and wrong


ta
rolf

 

[Marty McDonald]

The credit scoring models are not nearly as clever as the architects think. The system stinks for a whole bunch of credit worthy borrowers who may have either had unothorised credit checks done or had the audacity to shop around.

 

[Aaron_C]

The credit scoring models are not nearly as clever as the architects think. The system stinks for a whole bunch of credit worthy borrowers who may have either had unothorised credit checks done or had the audacity to shop around.

I used to work at a Big 4 Bank and if you knew the quality of people working there, you wouldn't buy bank shares.

 

[Rolf Latham]

The credit scoring models are not nearly as clever as the architects think. The system stinks for a whole bunch of credit worthy borrowers who may have either had unothorised credit checks done or had the audacity to shop around.[/QUOTE

I agree

I have been blessed to be around for a few years in the broking business..........

The default rate on my book is weeny compared to that of the normal lender book, and the foreclosure rate is even less.

While I understand that a credit scoring system attempts to remove the human element, and...............in reality is statistically valid over very large numbers, I can honestly say the capacity of lenders to pick risk vs return is poor .........

ta

rolf

 

[Hysteria]

Aaron it definitely stinks and is a reason why I refuse to do credit reports for clients. My experience is that it's more likely to hurt them than help them.

Getting your own credit report done is definitely a good thing for borrowers.

I did do my own credit check a few weeks ago with D&B so this is ok and wont effect my file when I go for a loan?

Only reason I did this was because telstra kept on sending me a dissconnection notice for a broadband service I never had. This went on for about 5 months. Every month I would receive a reminder notice to pay this dissconnection fee.
I would ring telstra, get put on hold, be transfered to someone else, transfered again, then get told to go back to the store where I purchased the modem. I didnt have a modem for *&@% sake. I would repeat this month after month until I received a telegram from D&B.

The due date fell on a sunday, $630.. I though i better ring D&B which was on this sunday and I was surprised someone was there and answered. The consultant said I had to pay by the due date otherwise this will end up on my file. I reluctantly paid the bill by credit card.

I got onto the Ombudsam the next day. Telstra contacted me within 2 days, and sent me a refund within 4 weeks. Crap like this is so frustrating especially when it gets to the point when you get a telegram. WTF. I hope my next telegram is when I reach the ripe old age of 100.