husband has bad credit

hey guys, been reading forums from afar, finally decided to join (wish I had've asked for advice 3 months ago)

Here's my situation.
I owned a very small house (PPOR) in outer east suburb of melbourne, on subdivided block. Bought for 198K in 2005 (classed as a unit) and had a revolving line of credit loan, with the balance down to around 175k in Jan11.

After getting married, I decided to upgrade. Did credit checks on ourselves with Veda Advantage, mine was fine but my husband had 1 small unpaid default of around $600 (for a cashconvertors type loan)

We paid it immediately, and wrote a letter to the bank to explain how the default had occurred, which my broker thought would be accepted.

Anyway, went ahead and sold house for 315000, but then it all went wrong. Right when new loan application was about to be approved, it was discovered my husband has 2 more unpaid defaults, listed on Baycorp. (He'd previously held a qld drivers license and these defaults do not appear on the Veda file).

So my questions are.
Was I naive to think that getting a copy of our Veda files was enough? I did not know there were multiple credit reporting agencies.

And secondly, does anyone know of any banks that will accept paid or unpaid defaults? We are now renting (not happy) until we investigate what these defaults are.

Thirdly, is there any way to get a loan just in my name. I suspect that my income alone will not meet serviceability requirements, but is there any way to go where I can get the loan in my name but charge my husband rent. Or can a 'tenants in common' come into play here? (pls excuse my naivity)

We used the proceeds of sale to pay out ALL existing debts, except the unpaid defaults as we still dont know the details of these yet.

With no debts, we wont have any problems in terms of paying the mortgage - its just whether the banks will approve based on only my income.

Also, we aim to pay 20% deposit so LMI wont be issue.

Sorry guys, for really long post, but could really use your help here. I'm really worried now that our mistakes could leave me locked out of the market, and I want to buy while the prices are down in my area.

There are a few lenders in the specialist area that may look at this for you.

Aside from all the normal hoops, they will want to be sure that there is a very good reason why these issues occured in the first place, that the cause has been fixed and that you havent made too many eqnuiries for finance in recent times

Hi lilamber

Welcome to the Forum!

Sorry to hear that your hopes for a new home have hit a wall.

There are plenty of lenders which are able to take an holistic view of the application

If the credit situation is deemed to be outside of main stream lending criteria, sometimes we have to make the 'Knight's move' on the board and move sideways before we come back to the direct route

I have a customer at the moment, been out of work for two years while winding up a considerable matrimonial settlement. He also had a small but recent GE default. Tried a variety of lenders but no banana.

As my customer had signed an unconditional contract, we then looked at the non-conforming lenders and he chose the most flexible option available. Once he has two stable financial years we will be able to move him back to the High Street lenders.

Kilsyth is a great place to be. Hope you can soon sort this out and be sitting by your own fireplace some time soon

Thx for your reply.

Upon advise of our broker (who we are not using anymore) we did write up an explanation for the defaults, blaming family breakdown and sudden move back to melbourne. I'm not sure if there's really any excuse thats acceptable for not paying your debts, but the broker said it was a reasonable enough excuse.

We only have 1 recent enquiry on our credit file, which was the application that all went wrong.

Does anybody know of any lenders that will consider our situation but wont penalise us too much in the way of a high interest rate. The broker we had tried to offer us a loan through resi with interest of 9.69%, and with the property we were trying to buy, it was just way to scary to commit to it.

Mind you, we never did find out if we were even approved. The broker would not return my calls. I think once we found a rental, the urgency was removed and I think he was doubtful we would be approved for anything so cut his losses.

I am willing to consider non-conforming, but does anyone have any advice on any lenders would consider us, or is there any way of doing it just in my name to avoid the higher interest?

I'm currently living in Croydon, Vic and am now looking for a new broker if anyone is interested in helping me (as I'm new here, please forgive me if its against the rules to ask that)
Hi Lil

we dont know the fine details, mid 9s is about right for a year or 2 till u can establish a new history.

The higher rates are not really a "penalty" per se more like an "appropriate" marging for perceived risk.

Your general feedback suggests you might be better served to clean up the file and sit it out for a year or 2 ?

Hi Rolf

Yes, I know your right. Sit and wait. Really not happy about it. hindsight is lovely, but wish I had've just stayed where we were. Is very disappointing, as we did the credit check at Veda and thought it was fine. Didn't know we had to check with Baycorp too.

Ah well, you live and learn I guess. I do still want to investigate getting into a higher interest loan for the appropiate amount of time then switching later, depending on affordabilty. If anyone can point me towards anything I'd be grateful.
Your husband would have known of these unpaid items,
It is a shame he didn't have the innards to tell you before you gave up your life.:confused:
Your husband would have known of these unpaid items,
It is a shame he didn't have the innards to tell you before you gave up your life.:confused:

I agree Pa1nter. To the OP - it might be best to do some further digging around in your husband's financial history. It's not the fact that he has a few defaults that is the problem. We all make mistakes. It's the fact that he is refusing to tell you anything until he is forced to. That's not a good sign. Who knows what else might come up. You need to get a true picture of his financial history since he doesn't seem to want to be honest with you.

Also it is not "our mistakes" - it is *his* mistakes. Don't feel bad or take responsibility for defaults which had nothing to do with you!
with rents as cheap as they are you may be better banking the saved cash and you'll probably buy the house you want cheaper in 2 years time than today anyway
Your husband would have known of these unpaid items,
It is a shame he didn't have the innards to tell you before you gave up your life.:confused:

don't be too harsh on the OP.

she did point out that hubby went thru a messy divorce and then left the city. having been thru a bugger of a one myself many many years ago - stuff doesn't get forwarded, bills and reminders get missed when they go to the wrong address, pettiness rears it's ugly head.

first problem is to find out what the overdue bills are (hope they're not asic - haha) and get them paid ... then we'll move onto the next step.

don't let this ruin your life together as is only a minor hiccup - and the universe works in mysterious ways, for the better, but unfortunately you don't usually realise until hindsight kicks in.
Lizzie's message has a BIG truth within it.

even folks that go to the wall often come out the other side tougher, stronger and better business people, its just another phase of the learning process

Nicely said liz!

Defaults are not the end of the world...especially if your husband has 3-4 of them only- i seen 6-7 and the loan was still accepted.

Your choice of lenders would be limited, and also the rates would be slightly higher- starting around 7.6% - 14%+
In your case, i would think it be more towards the 9-10% mark, but need to know the finner details to be sure. But i would say your broker gave you the right info; it might not have been the infor you wanted to hear though.

1. Some banks will disregard any defaults under $500 and some at $1000
2. If you can give a good explanation for the default listing ( ie moved?) then this can also be disregarded as long as the problems gets rectify
3. If the default were wrongly placed, then you can get it removed by contacting the organisation directly or hire a Professional credit removalist agency.

Hey guys, thx for all the comments.
My husband did know and tell me about previous debts from qld. (1 is telstra, not sure about the other 1 yet) We got a car loan just over a year ago, and he told the broker then (different broker) that he thought he had a credit default from years ago.

The finance went through, and broker showed him a copy of his credit file - no telstra default. We wrongly assumed that it must've been so old that it had come off.

So none of this was any deliberate secrecy on my husbands part. Just a bit of youthful stupidity if anything, and not understanding the consequences of running away and not finalising affairs. He has certainly learnt a lot from this whole situation, and is blaming himself for me losing my asset.

I dont blame him, truth be told we both should have done more homework. At the end of the day, I got out of comfort zone & took a risk. It hasn't quite worked out the way we planned, but a little patience (which is not my strong point) will get us there in the end, hopeful a little wiser too.
Ok guys, I've managed to find out a little more info regarding the 2 other defaults.
Original Credit Provider: Telstra Credit Management $1804 (payment default)
Originally Listed 27 Sep 06
Latest Credit Provider: Baycorp Collect
Latest Date: 27 Aug 07

Original Credit Provider: B Digital Limited $3796
Originally Listed: 01 Jun 06
Latest Credit Provider: Soul Communications Ltd
Latest Date: 22 jul 09
Plus the 1 we did find out about on his Veda file previously mentioned, Safrock Finance, $553 – Paid - due to come off 2015

Ok so my question is:
What do future credit providers think of having defaults that are ‘settled’, rather than ‘paid’.

Will normal lenders consider paid or settled defaults if it’s been say 1 or 2 years since they were closed?
Or will normal lenders always be a blanket ‘no’ while the defaults are on his file.

And if so, if we go to non-conforming, how long should we wait after they’re closed, and will it make a difference if paid or settled.

The way I see it, if it doesn’t make a difference if the defaults are settled, then I’d obviously prefer to pay a lower amount.

Also, regarding the big one for $3796, I will probably offer an explanation letter advising the amount was disputed, as it was claimed he made an overseas call.
I hear this isn’t all that uncommon. Has anyone heard of this explanation being accepted.

Appreciate any further advice.
ohh wow- they are big amounts..and it looks like they are active default thats being rolling over.

The oversea call explanation unfortunately most likely wont cut with the lender; unless you have some solid proof OR the Listing company is happy to take your explanation and writes a letter to that effect.

Speak to the ombudsman if your having trouble getting this listing remove due to their mistake...

yes they are big amounts! Unfortunately they are so old now, that it's going to be difficult to get copies of the original bill and argue that the calls were'nt made. Yet another lesson for my husband that he should of dealt with it at the time.

This is why I'm wondering whether its better if I just settle the debts. Seems to me that the size of these defaults is going to hurt him, even with non-conforming. If we cant get finance and have to wait til they are removed in 4 years or so, then maybe I'm better to 'settle' them.

Basically, considering I may have to wait til 2015, I feel there's no benefit to paying them in full, but rather settle them only to stop them from being re-listed.

That said, I still think its worth looking at alternatives, in the way of doing something on my own. May just have to save and set up our finances to show better serviceabiltity for me alone, for some time in the future.