Comparison shopping could actually work against you when it comes to finding the right loan or mortgage.

Let’s be clear on one thing: shopping around for a loan is smart and working with an experienced broker is crucial. Lot’s of banks are vying for your business and it is up to you to be selective.

But you can’t expect to apply at various institutions without facing some consequences.

As nice as it may be to have a back-up plan, lenders don’t see your shopping as a good sign of your creditworthiness. Banks will conclude that you’re shopping around because you keep getting turned down. This implies that you’re a high-risk borrower.

You might be considering a particular lender because they are offering a really good rate. But what you don’t see is the fact that they are only holding out those rates for individuals with a credit background that may be much better than your own.

As a plan B, you decide to apply to one or two less desirable offers.

But you may wind up paying for this tactic by having all your applications declined – including future ones.

Some sneaky online lenders snag unwary would-be borrowers with offers of making an inquiry into your qualifications. You might think it’s not a big deal since you’re not submitting any paperwork. But those inquiries can often go through as applications. Lenders will see that attempt on your credit record and may decide not to lend to you because of it.

Your credit score is the main thing any bank will look at to determine whether you qualify for a loan. It’s important to keep your credit score looking clean so that it depicts you as a responsible borrower.

So while shopping around for the best loan is a good idea, be very careful that you don’t apply too hastily.

What if you have recently applied (intentionally or otherwise) to a few lending institutions?

Fortunately, comparison shopping doesn’t stay on your record for long. Just give it a few months, don’t “shop” around like that anymore, and your credit score will be back up to par.

Need advice about your credit score or help finding the best loan deal, the right way? Contact our team here at Emnon.

– Dom Cassisi, Managing Director

Bad credit is a threat to lenders.

Any sign that you haven’t done well paying off debts, loans or bills scares other institutions away from taking a chance on you.

You understand this well enough. But here’s where a new problem for you comes in: circumstances beyond your control have tarnished your credit and there’s nothing you can do about that.

Identity theft, divorce, illness and the unexpected loss of a job are all huge game-changers that affect your ability to maintain good credit. Most mainstream lenders aren’t looking at such situations, however. They’re using an automated system that crunches a few numbers and they let those numbers dictate your fate.

Poor credit score? Good luck trying to get a loan.

Don’t despair just yet, however. There’s hope on the horizon.

Before applying for any loan, it’s always wise to do all you can to whip some respect back into your credit report.

Get a copy of your credit report, to begin with, and familiarise yourself with what’s there. If you ever need to defend, explain or simply discuss your history with a potential lender, you’ll be prepared to do so after knowing what might concern them.

After taking a good look at your credit, follow these steps to make it more pleasing to the eye of lending institutions:

– Pay bills on time

– Don’t be late on any payments, even credit card ones

– Look into removing bad credit listings

– Don’t apply for credit too often (more than once in six months is suspicious)

– Take action to correct debts and deficits

As mentioned earlier, most lenders make it difficult for those with credit problems to get a loan. But there are some specialist lenders who actually make the effort to look at more than your credit score.

Some of these lenders understand that you may not be a bad borrower. You’ve simply faced some challenges and need someone who understands your situation. These lenders will take a look at your circumstances, the whole picture.

In some circumstances you may be able to avoid Lender’s Mortgage Insurance (LMI). LMI protects the lender, but that bring about even more strict borrowing requirements. Some specialist lenders may provide their own alternative, so to speak, which is far less discriminatory.

Given the complexity of the circumstances, it is highly recommended to take advice from a finance broker.

Remember that transparency is crucial during the process. You’ll gain nothing but the doubt and suspicion if you try to overlook important details or omit key information. It will only make it harder for you to get a loan if you’re dishonest.

At the heart of the matter, getting a loan with bad credit is possible. You need to:

– Avoid more debt

– Repair your current credit history

– Stay on-track with your current spending and saving habits

– Work with a finance broker to find lenders who understand your situation

So how do you get started?

Contact Emnon. We’re ready to help you put a plan in place, find the right lender and start realising your financial dreams.

– Dom Cassisi, Managing Director