Join Australia's most dynamic and respected property investment community

Mark on credit file by "applying for borrowing capacity"

Discussion in 'Property Finance' started by Moist, 12th Jul, 2015.

  1. Moist

    Moist Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    93
    Location:
    Melbourne
    My contact at the bank said he was going to send off to credit to see my borrowing capacity? Does this mark my credit file?

    I thought only formal applications mark your credit file?
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,147
    Location:
    Canberra and Sydney
    Yes it will - they're submitting an application.

    A borrowing capacity check doesn't require an application to be submitted!

    Normal practice for banks though - they like to try and trap you.
     
  3. Random Username

    Random Username Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    239
    Location:
    NSW
    What is the purpose of this and why would they do that?
     
  4. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    742
    Location:
    Homeless
    Can't say it enough, get yourself a good broker that acts in your best interests.

    As Jamie said, to trap you. Although a bank would probably claim to give you more accurate informed service.
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    You really are best of contacting a broker to find out borrowing capacity. Going from Bank to bank is inefficient, and as you've found can result in unwanted credit enquiries. Depending on your situation this can effect the success when you actually do want to apply for a loan.
     
  6. Moist

    Moist Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    93
    Location:
    Melbourne
    Thanks for the feedback. Could someone please explain how this would "trap me"?
     
  7. Moist

    Moist Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    93
    Location:
    Melbourne
    also don't they have to put a nominated sum on an application? I haven't asked for anything specific......What would he be putting as the proposed loan amount?

    Also, I made an application with him only two months ago. I was originally declined due to insufficient financials. In the end, they approved me at the last minute as I produced more financials. However by then, I was approved with another lender and went with them.

    My question is, would he just be continuing the same enquiry from last time? As I haven't signed any new consent forms..... Also would they do another credit check from only 2 months ago?
     
  8. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,167
    Location:
    Adelaide, SA
    You're potentially causing yourself some long term problems going down this current path - by the sounds of it you already have a number of credit hits piling up on your file, over time this can make your credit file look quite sick if not properly managed. Instead of heading in branch and getting hit with another hit each time, go speak to a broker who can look at your specific situation and provide advice on the BEST lenders + products to use to achieve your goals.
     
  9. Moist

    Moist Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    93
    Location:
    Melbourne
    Thanks for the advice and I will certainly take it I think.

    Just out of curiosity though, are enquiries really that bad? Especially if I'm showing that I have a loan for each enquiry and not wasting peoples time....
     
  10. Random Username

    Random Username Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    239
    Location:
    NSW
    No response, no worries, I'll ask the banks why.
     
  11. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,167
    Location:
    Adelaide, SA
    The majority of lenders are now using computer generated credit scoring, which take into consideration a huge array of data, including number of credit enquiries. Some lenders systems will auto decline you regardless of the strength of the application if you have too many hits.

    Standard practice to try lock in customers, can make them feel that they have already progressed with the lender and shouldn't go elsewhere. All an attempt to make a client 'sticky' than look after the clients best interests (which may not be with that specific bank.
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast

    If you signed an app, then its liklay a FORMAL application.

    You later asked, are enquries really a bad thing

    Generally, no .............. if you have a long term job, long term resi stability, some good credit history and ideally a loan at or below 80 %

    If not all of these fit, or the loan is > 90 % lvr, that one extra enquiry can put your borrowings out to pasture for 6 to 18 mths.

    ta

    rolf
     
  13. Moist

    Moist Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    93
    Location:
    Melbourne
    Hi Rolf,

    The application I signed was for a different property that already settled last month with a different lender. He said he would resubmit to credit to see my borrowing capacity....
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    so the banker cant really go for formal application without having a CRAA sign off

    If you have a concern, ask the banker if the enquiry made for a credit enquiry on your file

    ta
    rolf