Your credit file: explainededit
Whether you know it or not, your debts, finances and life events are all tallied into one document: your credit file. And the results have serious implications for your ability to get a loan through traditional models. In this post we breakdown what’s in your credit file, how it affects your ability to get ahead and how specialist lending can help when your credit file works against you.
Your credit file is like a record of you and your financial history. It contains things like your name, address and phone number as well as current and even former employers. Most importantly, it also shows any debts, unpaid credit cards, credit infringements, loan applications and potential issues may have had with your repayment history (eg electricity bills, mobile phone etc).
Banks use these financial history records to judge your propensity and ability to pay back a loan. They measure what they call ‘bad debt’ based on things like previous bankruptcy, any directorships that you might have, any issues that you have may have had with car loans, personal loans or credit cards. The number of loans that you apply for (whether successful or not) also affect your credit file as some lenders don’t like to see too many “credit enquiries”.
What’s missing from this information however, is the story of how each of these marks against your name may have appeared.
If you’re self-employed, you’re heavily impacted by not only your unique personal constraints, but also your business history. If you have had a dispute because goods were damaged whilst being delivered to you, you might be surprised to find out that your supplier may have lodged a default on your file and that this may impact your ability to get a loan for your business or your home. As well as the above, things like illness or injury will read as all too familiar realities facing people working hard to achieve their business ambition. And yet these unforeseeable human circumstances cause further harm because the rigidness of the lending models used by banks don’t accommodate them.
Talking with a specialist lender like RedZed can help you find a solution that gets behind the ink on the page. We set a human criteria, talking through your circumstances with your broker, helping us understand in detail your ability to repay a loan. It’s a tailored solution that requires more collaboration and longer term work than what the banks can provide. But we think it’s common sense really.
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