This case study is based on real clients who’ve had issues with a low credit score. For the purposes of this article we’ll call them Will & Kate. The names & certain details have been changed in the interest of privacy for the borrowers, however the key facts and how we were able to solve their problem remain the same.
Will and Kate had made an offer to purchase a property before getting a pre-approval in place. They then applied directly to their bank, who they had been loyal to for many years and expected to have their loan approved with ease. They had good equity in other properties and had both been in their jobs for an extended period of time.
Although they had been with their bank long term, they were declined due to failing the banks credit score system. The reason being that they had missed a few repayments on a previous home loan due to not having the direct debit payment set up correctly.
Will and Kate were not in financial distress in any way. This was simply an error when setting up previous home loans. This direct debit error was partly Will and Kate’s fault as they did not chase up the bank, but blame also lay on the bank for not ensuring that it was set up correctly in the first place.
This error often caused Will and Kate to be a few days late on their repayments which then showed in the banks computer system as defaults on their loan repayments, which then led the bank to decide that they were not willing to lend them any more money.
When we looked deeper into their situation it was very clear that Will and Kate had the funds available in a separate account. They regular had more than enough money to be three to four months ahead on their home loan repayments.
The solution we found was to go to a lender who did not credit score their application, and would look at their situation as a whole and take a common sense approach.
We were able to obtain the loan they wanted and it was approved within the finance clause period, in less time than their long-term bank had had the loan application and at a lower interest rate.