Hello,

I went through bankruptcy in 2003 was discharged in 2006 and it will drop off my credit file finally on 12/8/2010. A long 7 years!!

As I was so close to being clean my wife who has a glowing credit history and I applied for pre approval to buy a house/land package worth $350000, we have a 20% ($70000) deposit and are both employed. We are also entitled to FHOG so another $20000 to add to our argument. We applied with Bankwest and were declined straight away. The problem is the bank said even after 12/8/2010 when the record of my bankruptcy drops off my file my credit score is still terribly low due to the bankruptcy and therefore would still cause me problems getting approval. This is extremely frustrating and I would appreciate any advice you might have. We have not tried with any other lenders as we didnt want to have too many credit inquiries on our file.

Many thanks.

Jay.

Hi Jay,

Yes if the lender knows about the bankruptcy then your credit score will almost certainly fail. I would strongly recommend applying after the bankruptcy is removed from your file as then the choice of lenders is quite wide, however if you apply now we must explain the entire situation and they will send the loan to a high level credit manager for approval.

In the last three months the cost of funds for lenders has increased significantly. Because of this many lenders are currently declining anything borderline. Unfortunately for you this means your application as well.

My advice is as follows:

1. Wait for clean credit then apply with another lender. We can assist you with this.
2. If the house and land package will no longer be available, the provide us with as much evidence as possible to prove your credit worthiness and then we can help you to apply with another lender who's credit score can be overridden.

The kind of evidence we would need if we applied now is as follows:

1. Rental history, ideally 12 months.
2. Savings history, ideally 12 months.
3. Statements for any debts you have had recently showing a perfect payment history, ideally 12 months.
4. Written letter to explain of defaults / bankruptcy.
5. Evidence to back up letter explaining bankruptcy.
6. Anything else that can assist to help support your case.

Please give one of our mortgage brokers a call on 1300 889 743.

_________________
Otto Dargan
Mortgage Broker
Ph: 1300 889 743
The Home Loan Experts

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Thank you very much for reply and advice. We have decided to wait until next month when I am clear on my file and then try for pre approval