Can I Get a Loan With a Paid Default?
We know how it feels like to have an unwanted mark on your credit file, and we fully understand how that can hinder any financial support you may seek at any point in time.
Lucky for you, you don’t have to stop searching for the financial help you need for a couple of years until that history is gone. Let’s tell you the details!
Can I Get a Loan With a Paid Default? The Short Answer
If you’ve ever asked yourself, “can I get a loan with a paid default” the answer is yes. Today, many lenders offer you loans even if you have more than a single default. However, that comes at a price, and that price is usually higher interest rates, at least at the beginning. Do you need a loan been refused everywhere? Apply for a loan today with Perfect Payday.
Then, once you start keeping up with your payments, your interest rates start to decrease and return back to the standard interest rates. On average, that progress takes around 18 months. We explain loan repayment formula here.
7 Tips for Applying to a Loan With a Paid Default
To increase your chances of getting your loan applied, here’s what you should keep in mind during the process. We answer what does loan mean here.
1. Obtain a Copy of Your Credit File
Before applying, you need to be fully aware of your entire credit history. With a paid default in your records, lenders will certainly inspect your history before granting you any loan, so you need to be prepared to discuss your history in detail to boost your chances. Learn what happens when you default on loans here.
MyCreditFile enables you to get a free copy of your credit file, but take care that you can only do so once per year.
2. Settle Any Outstanding Debts
Our investigation demonstrated that, lenders will consider not only your credit history but also your efforts in addressing those credit mishaps. Therefore, prepare detailed answers of how you’ve gone about settling our debts, and most importantly, settle any current defaults (if any). Learn the payday loans definition here.
3. Seek a Credit Repair Service
Drawing from our experience, in many instances, credit repair services can remove default listings from your file if they didn’t initially adhere to the relevant laws. Undoubtedly, removing such listings from your file can tremendously support your application and help you obtain lower interest rates and fees than you would with their presence. Find out how to apply for a loan here.
4. Seek Specialist Lenders
You’d be surprised by the number of lenders in Australia who actually specialise in loans for people with paid defaults. At Perfect Payday, we can put you in contact with some of these lenders who look beyond the numbers. You don’t have to be punished for the rest of your life for a mishap that could happen to anyone! Can you get multiple payday loans at once? Learn more about multiple payday loans here.
What these lenders do is that while they do consider your credit file, they’re relatively lenient with their decision and factor in that unexpected situations happen in life and that your default could’ve been due to major circumstances like divorce, sickness, bankruptcy, or more.
Instead, they attempt to focus on your income and assets along with other factors that prove that you’ll be able to repay a loan on time, even if there are negative listings in your file.
5. Don’t Apply for Many Loans Simultaneously
Remember that your credit file includes every single credit inquiry made on your account, and it also includes your previous loan applications. Too many enquiries within the same period are a major red flag for lenders and indicate that you have money management issues, so be careful of who you apply with. Read about loans for 17 year olds here.
6. Be Honest
Honesty will always be the best policy. When you’re speaking with your lender, be open about your bad credit listings, even if it takes organizing a face-to-face meeting. The more information you provide your lender, the more you help them make a final decision on the loan application. Learn how to calculate interest on loan here.
7. Avoid Applying With a Partner With Bad Credit
If it’s not you with the paid default and instead, your partner or spouse, you can avoid getting your loan application rejected or even the higher interest rates by applying on your own rather than with them. While it’ll undoubtedly decrease your borrowing power, it’s a tradeoff you should consider making. Learn what is bank loan here.
Will I Get Approved?
As per our expertise, as long as you follow the 7 tips we’ve just suggested, your chances of getting the loan application process approved are certainly high. In a nutshell, this what you’ll need to provide for your loan to be considered:
- Provide a default explanation letter
- Provide evidence on the cause of your default
- You should have no more than two defaults in total
- You must’ve paid the default before applying (at least 6 months ahead)
- If you’re purchasing a house or property, you need at least 5% of the amount in savings
Do note that lenders will consider the type of defaults you have, when they’ve happened, whether they’re paid, and their overall total value. To increase your chances and prove your financial capability, you can also put in the largest deposit you could for the loan; that’ll impress the lenders!
Frequently Asked Questions:
What Will the Lender Know About My Defaults?
Basically, the lender will get to see the status of the default, whether it’s paid, unpaid, or settled. Since settled defaults aren’t the norm, it’s worth mentioning that these are cases where you’ve come to a resolution or agreement with the lender to pay part of the debt now and the rest later.
Moreover, lenders also know the exact date the defaults were put forward, their total amounts, the date they were paid (if they were), and who specifically submitted the defaults.
However, only defaults that were filed in the past five years will be available for the lenders. Anything before that won’t show up by any means.
What About Late Repayments?
Unfortunately, lenders can see your repayment history information too. Generally, overdue payments by more than 2 weeks are listed as late repayments. They’re there for your lenders to see for approximately two years (even if they’re overdue by a simple two weeks duration), in addition to a 24-month account repayment history.
Can I Hide My Paid Default From the Bank?
Only if they initially didn’t adhere to the relevant laws. Otherwise, it’s best not even to attempt to hide this information because lenders will perform a credit check, and they’ll know. We’d actually advise you to do otherwise – be blunt up front and don’t withhold any information that matters. Withholding it could be sufficient information for your loan to get rejected.
Does the Amount of the Default Matter?
Yes, it does significantly! Small paid defaults (less than $500) paid more than a year ago, along with excessive enquiries into your credit file, are generally approved with no issues at all. Other amounts and durations depend on the lender and its criteria.
Today, more flexible lenders are becoming available in the market, increasing the chances of lending loans to individuals with paid defaults. So, despite any low credit ratings, you’ll very well find a lender that considers your application and grants you the amount you need. Read more about how to pay off loan here.
That’s especially true since you’ve already paid the amount that was overdue in full to the original lender, so your chances are high of being viewed favourably! However, just to be on the safe side, make sure you provide sufficient evidence to back up why the default happened in the first place, accompanied by an explanation letter. Learn about secured or unsecured loan here.
Remember, Perfect Payday can always walk you through your options and connect you to the right lenders, so just reach out, and we’d be happy to help you get your loan approved even if you have paid defaults! Find out how long will it take me to pay off my loan here.