Bad Credit – what options do you have?

There is no denying the fact that one of the most valuable assets that we possess is our clean credit record and we must do everything we can to keep it that way. Everyone understands this but sometimes, there are events which we have no or little control over – for example losing a job, business losses, loss of income due to illness, relationship split etc. When facing such contingencies, we find it difficult to keep up with our bills and other financial obligations. I accept we cannot control everything, but bad credit can be avoided with a little more care in many cases.

Read Also – Is It A Good Time To Refinance Now?

It may not always be possible but if we have savings set aside for such unforeseen contingencies, we may be able to manage during difficult times, without any blemish on our credit file.

Also, if we are having cash flow issues because of avoidable spending, we need to think about it. The battle chasing the latest model of Mobile phone or other electronic gadgets is better lost sooner than later, or better still, not fought at all.

Sometimes it is seen, that even if there is no default against a debt, the online credit score may still be so low that the banks may not consider the lending request. One of the reasons for this may be too many credit checks over a shorter period, which is avoidable. Oversight is another major reason for not having a squeaky-clean credit file. In my experience I have seen in many cases, we may have funds sitting in savings accounts but may still miss the payments due to oversight. This is totally avoidable these days; lenders can know of such account behaviour in the past from credit checks.

And if we fail to catch up with the missed payments in time, this may result in a default situation – Not something you want to have on your credit file. If it is possible to always maintain a certain minimum balance in the account, missed payments because of oversight can be avoided. Having said the above, sometimes we all may face situations where our credit record is not that great, for whatever reason. It is times like this that it is all the more important for you to urgently talk to your bank or your financial advisor who may be able to help you or at least point you in the right direction.

Read Also – Refinance Mortgage with Better Interest Rates & Terms

Sometimes the situation may not be as bad as you think and with proper explanation, together with documented evidence, if possible, may be helpful for the lender to consider your request. Even if the banks are not considering your request based on your bad credit, there may be other solutions available. But it requires a detailed analysis of the situation to assess what options can be considered, if at all. Talk to your financial advisor.

If your continued default is likely to result in the sale of the property by the lender in the short term, speak with your financial advisor promptly. There are nonbank lenders in the market, who may be more flexible than the banks if your request is otherwise within their risk appetite.

However, non-bank lenders can be more expensive, and considering non-bank lenders should only be a last resort, and only if it helps you in your situation based on cost vs benefit analysis, and provided you have a clear exit strategy within a short time.

Talk to your financial adviser or Kiwi Mortgages for assistance.