Poor Credit History: What Are Your Options Moving Forward?

What If You Have a Poor Credit History?

A common concern many people have is: “I’ve had credit issues in the past—can I still move forward and buy another property?” This situation is more common than you might think. The short answer is: it may still be possible—but it depends on your current position and the strategy you take.

Understanding Credit History (And Why It Still Matters)

Even if you already own a home, lenders will still assess:

• Your credit history
• Your account conduct
• How you manage your current mortgage and debts

This includes factors such as:

• Past defaults
• Missed or late payments
• Any previous loan arrears

These factors influence how lenders view risk, especially when you are looking to take on more debt.

The Key Consideration: Your Recent Behaviour

What matters most is not just your past—but how you are managing your finances now. Lenders will look at:

• Whether past debts have been cleared
• How recent the issues were
• Whether your accounts are now well managed
• Stability of your income

Why Banks May Decline Further Lending

Even if you already have a home, banks may decline your application if:

• Credit issues are recent
• There have been recent arrears (even if now repaid)
• Your account conduct hasn’t yet stabilised long enough
• The bank sees increased risk with additional lending

This often surprises clients who feel they’ve already “recovered.”

So What Can You Do?

1. Understand Your Position Clearly
   Before applying again, it’s important to review your credit history and understand how recent issues may affect lending. Avoid multiple applications that may weaken your profile.
2. Consider Alternative Lending Options (If Suitable)
   In some cases, non-bank lenders may be able to assist. They typically take a more flexible view of past credit issues and focus more on your current affordability and situation. However, this approach needs to be carefully assessed and structured.
3. Have a Clear Strategy (Not Just Approval Focus)
   If using a non-bank solution, the typical approach is to secure lending based on your current position, maintain strong repayment behaviour, and continue improving your financial profile. The goal is not just to proceed—it’s to transition back to mainstream lending when ready.

Real Client Scenario (Example)

Here’s a simplified example based on a real type of situation:

• Client Situation: Already owns a home, looking to purchase a second property for better cash flow, previously had credit issues and some account conduct concerns.
• What Happened: The client initially approached their bank directly but was declined due to recent credit history and perceived risk.
• The Challenge: Limited time to act on the property, bank lending not available, still in a recovering position financially.
• Approach Taken: Reviewed the situation closely based on current income and affordability, overall position, and property suitability. Explored whether a non-bank lending option may be appropriate.
• Plan Going Forward: 1. Secure lending through a suitable non-bank option (if fitting criteria). 2. Maintain strong and consistent repayment behaviour. 3. Continue improving credit profile and financial position.

Over time, the goal would be to reassess bank lending criteria and refinance back to a mainstream bank loan when eligible.

Key Takeaway

A bank decline is not always the end—it often just means the timing isn’t right yet under standard bank rules. With the right approach, there may still be a path forward, depending on the situation.

Important Considerations

• Non-bank lending may come with higher interest rates.
• Structure and exit strategy are critical.
• Not all situations will be suitable.

Common Mistakes to Avoid

• Assuming a decline means no options.
• Applying to multiple lenders without a strategy.
• Ignoring recent financial behaviour.
• Rushing into unsuitable lending.
• Not planning how to return to bank lending.

Why Advice Matters in This Situation

When credit history is involved, the margin for error is smaller. A Mortgage Adviser can help:

• Assess whether you’re ready for bank lending or not.
• Identify alternative pathways (if suitable).
• Structure lending carefully.
• Plan a clear path back to standard lending.

This is not just about buying another property—it’s about continuing your journey in a controlled and structured way.

Final Thoughts

Past credit challenges don’t always stop your progress—but they do require the right approach. The key question is: Are you trying to push through a decline—or working with a structured plan forward?

Which Stage Are You Currently At?

If you’re looking to grow your property position but facing lending challenges, there may still be options—but the strategy matters.

Disclaimer

The information provided in this article is general in nature and does not take into account your personal situation, objectives, or needs. It should not be considered as personalised financial or investment advice. Before making any decisions, it is recommended that you seek independent professional advice relevant to your circumstances.