Seems I have a bad credit rating I want to borrow

[Starofdavid]

Ok I phoned my broker today that I used to buy my current property, which has been paid off.worth about 400k
Seems I have a bad credit rating owing a debt collector $300 for a utility account plus a credit card debt I defaulted on but I'm paying it off monthly so I don't know why it's default listed.

Anyway I wanted to borrow about $150,000' for a IP
The IP I am now looking at will be in Sydney City and priced up to $500,000
I have $350,000 cash deposit .

How can I fix my credit rating?
Should I pay the debt collector for the utility bill and then would it disappear from my record?
What about the credit card I'm paying off monthly?
Will anyone lend me money ????

 

[Hooray]

You have a couple hundred thousand deposit, and you owe some collector $300 and you're paying some credit card debt monthly???

 

[Brian84]

I agree. With that much cash how can you default and why don't you just pay the credit card off instead of making repayments and having to pay all the interest.

 

[Starofdavid]

Yes ... But the utility bill is a few years old and the CC debt I pay monthly with no interest for the next few years .
Because the Cc debt they allowed me into a payment arrangement with no interest ,that was a few years ago and I'm still on this agreement.
These are the only 2 on my file.

I need to fix them

 

[Peter_Tersteeg]

How can I fix my credit rating?
Should I pay the debt collector for the utility bill and then would it disappear from my record?
What about the credit card I'm paying off monthly?
Will anyone lend me money ????

Pay off the utility bill and the credit card if you want to borrow money at all, but it's not going to clear your credit rating at this point.

The good news is you can still borrow money with bad credit. Having such a large deposit makes it very favorable. You're going to have to pay higher rates and pay some higher fees than you would otherwise need. With the large deposit, it's not entirely unreasonable. I've had a few clients in a similar position and they still felt the deal was worthwhile.

 

[hobo]

I need to fix them

Then pay them out (ie your outstanding defaults/debts).

But no, that won't magically clear your credit rating/history. That's why it's called "history".

 

[Ausprop]

why bother paying them, they have had their vengeance and defaulted his file, now they must pay the price and wait. Why would anyone pay back an interest free loan early??

In fact I would call the credit card co and make a deal to settle. Start around 50%

 

[Peter_Tersteeg]

why bother paying them, they have had their vengeance and defaulted his file, now they must pay the price and wait. Why would anyone pay back an interest free loan early??

In fact I would call the credit card co and make a deal to settle. Start around 50%

You pay them back because lenders can see if the default is paid or unpaid, and the lending available is priced accordingly.

Pay back a negligible debt = Better rates saving thousands over time.

 

[Ausprop]

kk

would still cut a deal with the cc, they will mark the file as paid

 

[Jamie M]

With such a massive deposit you should be able to obtain finance still.

That $300 utility bill usually isn't a drama - but throwing in a CC default in the mix will cause some concern from the banks point of view.

Cheers

Jamie

 

[Shahin_Afarin]

Whats the LVR and who is the existing lender?

 

[Mick C]

Ok I phoned my broker today that I used to buy my current property, which has been paid off.worth about 400k
Seems I have a bad credit rating owing a debt collector $300 for a utility account plus a credit card debt I defaulted on but I'm paying it off monthly so I don't know why it's default listed.

LOl that arn't a bad credit ....it is if you submit the loan with the big 4, as there's a chance of a auto reject but you can easily go with a non credit scoring lender and bang easy done as you
- Have 20% deposit
- Paid off your home ( good history)
- Buying IP
-Utility bill default is under $500

Mate your fine....unless there's more to your credit file.

 

[CosmicTrevor]

Smells funny

How can you amass a deposit of $350k plus a current property (is it PPOR or IP) while having defaulted on a utility bill and a credit card, something seems funny.

Does it mean you had this money tucked away while you somehow defaulted on the bill and the credit card? If this is the case how did this happen? Was it poor management? If so have you learned from your mistakes and ready to take on more debt and responsibility?

Or does it mean that you have come into a chunk of money from an inheritance or by winning the lottery after you defaulted?

Do you have an income to service the debt - even at the low LVR you propose?

Why not set up a LOC on your current property to access the equity and fund the acquisition yourself (ie LOC + $350k cash). You will need to mortgage the paid off property, but it might get around the problem. maybe I'm misunderstanding your situation?

Talk to an accountant and a MB to work this out.