Macquarie Bank has recently come under scrutiny due to significant compliance failures identified by ASIC, who allege that Macquarie misreported up to 1.5 billion short sale transactions over a 14-year period, potentially distorting market transparency . These issues, some undetected for over a decade, have led ASIC to impose additional conditions on Macquarie’s Australian financial services licence, requiring the bank to develop a remediation plan and undergo independent reviews.
Whilst this might sound like a token slap on the wrist, the associated fines could reach up to A$500 million if the allegations are upheld.
Are investors spooked by this at all? It wouldn’t appear so, with Macquarie’s share price climbing over 15% in the last month.
In this week’s newsletter, we look at the ramifications of having a default or court order on your credit file when it comes to getting a home loan.
When applying for a home loan, your credit history is one of the most important factors lenders assess. If you have a default or court order listed on your credit file, it can significantly affect your borrowing power and the likelihood of approval.
A default usually appears when a debt over $150 is left unpaid for more than 60 days. A court order indicates legal action was taken to recover the debt. These listings suggest to lenders that you may be a high-risk borrower, which can result in declined applications, higher interest rates, or stricter conditions.
Defaults and court judgments remain on your credit report for five years, even if you’ve since repaid the debt. If the debt remains unpaid or unresolved, the impact on your creditworthiness is more severe. Court orders, in particular, raise concerns as they reflect legal enforcement, not just missed payments.
Can You Remove a Default or Court Order?
Yes, but only under certain circumstances. If the listing is incorrect, was placed without following proper procedures, or the debt was paid before being reported, you may be able to have it removed. You can:
- Dispute the listing with the credit provider
- Lodge a correction request with credit reporting bodies like Equifax, illion or Experian
- Negotiate with the creditor for a goodwill removal if the debt has been paid
Alternatively, there are specialist credit repair agencies in Australia that can help with applications to have listings such as defaults, court judgments, or serious credit infringements removed from your credit file.
These agencies typically:
- Assess the validity of the listing and whether it complies with credit reporting laws
- Negotiate with creditors on your behalf to remove or amend listings, especially if the debt was paid, settled, or listed incorrectly
- Lodge disputes with credit reporting bodies like Equifax, illion, and Experian
Important Considerations:
- Fees: These services usually charge a fee, which can vary significantly. Be sure to understand the cost structure before engaging them.
- Avoid Scams: Be cautious of agencies promising guaranteed removal or pressuring you to pay upfront. Always check reviews and ASIC registration.
Specialist agencies can assist with removing unfair or inaccurate listings, but due diligence is essential to ensure you’re working with a reputable provider.
Are There Lenders Who Still Approve Bad Credit Home Loans?
Yes. While most major banks have strict criteria, non-bank and specialist lenders are more flexible. They assess applications individually and may still approve loans for borrowers with defaults or court orders, typically requiring a larger deposit or charging a higher interest rate.
If you have a client who has had credit issues in the past, working with an experienced mortgage broker like Mortgage Domayne who understands non-conforming loans can significantly improve your chances of finding a suitable lender and getting back on track.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
