Credit History

When you’re applying for any finance, whether it’s for a car, motorbike, boat or caravan or commercial assets, it’s important to know how the finance industry operates. Your credit history will play a big part in an assessment process. Many enquiries, poor payment history, a new credit file, age, bankruptcy all come into play when these assessments are done. Credit conduct is important to understand so you can give yourself the highest chance of the best finance rates.

It’s clearly very important to the finance company that you are able to service, i.e. repay the loan. So they make extensive investigations into your credit history before they approve any loan. They’re normally looking for any history of not paying bills or repayments on time, but credit checks also take into account a huge range of factors, from what income you have through to assets you own, and whether you’re renting or paying off a mortgage.

The One Credit History Check People Forget About …

But there’s one other factor a lot of people are missing which can negatively impact your ability to get a loan. This is where you’ve put multiple finance applications into different finance companies over a relatively short period of time.

Many are not aware that the process of shopping around and putting in multiple applications will impact their creditworthiness. Your credit file will mark this as “over shopping” and can decrease your credit score. Lenders will see this and think that you have been declined by several lending institutions.

People putting in multiple credit applications, even if they don’t end up accepting the credit offer, can be considered to be less creditworthy, and research does show they are more likely to default.

A Higher Interest Rate OR Even a Credit Rejection!

Even if the result is not an outright credit rejection, you can still end up paying a higher interest rate or having to go to a special ‘non-conforming’ lender where you will pay a higher interest rate anyway.

If you want to make sure you’re getting the best rate without being caught in the ‘busy recent credit history’ trap. The best thing to do is talk to a broker (like us), so we can advise you on your options and then put in the one application for the best credit deal for you, instead of multiple applications.

If you do find yourself classified as a having a busy recent credit history, there is only one thing you can do – wait. Depending on the sort of finance you’re looking for this can be anything from three to six months or longer.

To Summarise

• Every application you make for finance leaves an impression on your credit history.
• Multiple applications in a short period can impact your creditworthiness.
• Financiers and banks do not look kindly on applicants with a ‘busy recent credit history’.
• The negative effects of a “busy” credit history can include receiving a higher interest rate. Thus, having to use a non-conforming lender or in the worst case being declined.
• Time is the only thing that can resolve these issues if you have a busy credit history.

So What Should I Do To Avoid A Busy Credit History?

Simply, talking to a loan broker like Finance EZI will help you to avoid issues with multiple applications. We can look at your circumstances. Whilst we can’t tell you your exact interest rate, we can let you know of any potential issues. In which will save you applying and potentially being “knocked back” numerous times resulting in a busy credit history.

We’re real people and we understand that you want the best deal. We certainly want to help you get it. Call us today on 1300 003 003, or simply apply online to get the ball rolling. If you are looking at consumer finance, click here.