When assessing a borrower’s financial capacity, a lender reviews their past credit history. Credit is the third ‘C’.

They do this by conducting a credit check, usually with a company called Equifax. This company collects and records any defaults, summons or judgements a borrower may have incurred. Each time an enquiry is made by a potential lender it is recorded.

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Historically, those with a poor credit history have difficulties in obtaining approval for finance. However, there are now a number of non-bank lenders who specialise in lending to borrowers with various degrees of credit impairment. The greater the severity of credit impairment, the higher the interest rate and possibility of reduced LVRs and loan amounts.