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Why Paying Off Defaults Fast Matters For Your Credit · That Home Loan Hub

• 0:10
  SPEAKER_02: If your credit check has ever been affected by various defaults because of the mistakes of the past and that happens, listen up.
• 0:20
  SPEAKER_02: This is the episode for you.
• 0:22
  SPEAKER_02: I've got Cunch in the house and we're gonna talk about defaults and the time you take to pay them off.
• 0:27
  SPEAKER_02: Yes.
• 0:28
  SPEAKER_02: Go for it.
• 0:28
  SPEAKER_00: Kiola team.
• 0:29
  SPEAKER_00: Yeah, I thought we'll cover off that hot topic.
• 0:33
  SPEAKER_00: Obviously, a default is when you haven't paid like a your bill, your personal loan, your credit card, or something like that, and it defaults through to a collection agency and then it shows up on your credit check.
• 0:46
  SPEAKER_00: Then you're like, oh, okay, we'll set up a payment arrangement or something with your that debt collection agency.
• 0:53
  SPEAKER_00: So the agent agrees, okay,$50, you know, a month or a week, a fortnight, a month.
• 0:58
  SPEAKER_00: And you're like, yep, cool, sweet.
• 1:00
  SPEAKER_00: And none behold, right?
• 1:02
  SPEAKER_00: Because you're like, okay, well, I've made that arrangement.
• 1:04
  SPEAKER_00: It's kind of like the arrangement I already had with the loan agreement.
• 1:09
  SPEAKER_00: So I'm just gonna keep paying that$50 a fortnight, and it's taking me, you know, three years, two years to pay it.
• 1:19
  SPEAKER_00: And you're like, sweethead.
• 1:21
  SPEAKER_01: Right?
• 1:22
  SPEAKER_01: I think we did a similar episode a few weeks ago, two months ago.
• 1:27
  SPEAKER_02: And the key here is the reason sometimes it does go, let me rewind a little bit.
• 1:34
  SPEAKER_02: The the reason it does go to credit collection sometimes because of lifestyle situations, right?
• 1:40
  SPEAKER_02: There might be a marriage breakup, there might be a relationship breakup, there might be job challenges, you might have lost a job, looking for a new job, etc.
• 1:49
  SPEAKER_02: And then your lender might have and you've forgotten about to pay certain bills or you would have prioritized certain bills over other bills.
• 1:56
  SPEAKER_02: So your lender would send your bill to a credit collection agency.
• 2:00
  SPEAKER_02: And at that point, that might be a few months later, so six months later, your life actually looks better now.
• 2:06
  SPEAKER_02: You might have got a new partner, or you might have got out of debt, or you might have got a new job.
• 2:11
  SPEAKER_02: So your life is much better.
• 2:13
  SPEAKER_02: But you set up a new repayment schedule with the debt collection agency.
• 2:19
  SPEAKER_02: And because they've set it up an absolute minimum at the time of your suffering, and you didn't change it when your suffering has ended, when you actually lend it a better job and you've got more money now to pay for it, you just thought, oh well, I'm just gonna pay for it, whatever it is, because why should I bother paying more?
• 2:37
  SPEAKER_02: Right?
• 2:37
  SPEAKER_02: And this is where we see things go wrong.
• 2:40
  SPEAKER_02: Yeah.
• 2:41
  SPEAKER_00: Yeah.
• 2:41
  SPEAKER_00: I I guess it's more it isn't the educational piece, right?
• 2:45
  SPEAKER_00: You're thinking, oh, well, I've already made that payment arrangement, I can carry on with life.
• 2:50
  SPEAKER_00: However, once uh you know it's paid, it actually shows on your credit check how long it's taken you to pay it.
• 2:59
  SPEAKER_00: So most lenders are going to ask the question, why did it take you so long to pay it?
• 3:04
  SPEAKER_00: And that also comes down to the is it three canons of lending, we call it the three C's, which is you know, character.
• 3:13
  SPEAKER_00: So it comes down to your character, and they want to understand, you know, why did it take you two or three years to pay off this default?
• 3:22
  SPEAKER_02: Exactly.
• 3:22
  SPEAKER_02: Like there will be understanding that look, crap does happen in life.
• 3:26
  SPEAKER_02: Yeah, life life happens to people, but then it's how you went about when the life did change for them.
• 3:35
  SPEAKER_00: Yeah, how you went about making those changes and taking responsibility to pay those commitments.
• 3:42
  SPEAKER_00: Yeah, so it's morely if you do have a default, prioritize that and get that paid as soon as you can.
• 3:49
  SPEAKER_00: Don't take, you know, two or three years.
• 3:52
  SPEAKER_02: If you can manage to pay it off quickly, that's what I also sometimes see those situations happen as a result of stubbornness.
• 4:03
  SPEAKER_02: And like, for instance, if there was a relationship, right, Mrs.
• 4:06
  SPEAKER_02: took out a loan for the mister, the relationship breaks down, Mr.
• 4:10
  SPEAKER_02: stops paying that loan because he's like, Well, stuff you we're no longer together, I don't care about this.
• 4:14
  SPEAKER_02: And then she's stuck with that loan, and she goes, Well, I'm not gonna pay it because it's yours.
• 4:17
  SPEAKER_02: Yeah, and then it goes to the credit collections, and then she doesn't want to pay for that, or he doesn't want to pay for it, right?
• 4:24
  SPEAKER_02: If it's a the reverse, because they are stubborn in the sense of this is not my loan, this is not my debt, why should I be paying for it?
• 4:35
  SPEAKER_02: This is not fair, yeah.
• 4:37
  SPEAKER_02: But the problem in the bank's eyes, correct, you took out that loan, it's your name.
• 4:42
  SPEAKER_00: Responsibility, yeah.
• 4:43
  SPEAKER_00: You're responsible for it.
• 4:45
  SPEAKER_00: You sign that contract to say I'm responsible for it.
• 4:49
  SPEAKER_00: And you can't just turn around and go, No, don't want to do it anymore.
• 4:53
  SPEAKER_02: And this is where I've seen stubbornness get in the way of people getting ahead in life.
• 4:59
  SPEAKER_02: Correct.
• 5:00
  SPEAKER_02: And this episode is more for us to show you that hey, we understand, we feel you, we've seen those situations, but only you can change the future.
• 5:12
  SPEAKER_02: Yeah.
• 5:12
  SPEAKER_00: It's a it's just a recommendation to if you can, you know, pay it off faster.
• 5:18
  SPEAKER_00: That's what we would recommend for you to prioritize first and foremost.
• 5:23
  SPEAKER_02: And then deal with the rest with the rest later.
• 5:27
  SPEAKER_02: Deal with the default as quick as you can.
• 5:30
  SPEAKER_02: Yeah.
• 5:30
  SPEAKER_02: So deal with the default, get your name cleared because that will prevent you from obtaining future finance, especially with the banks.
• 5:38
  SPEAKER_02: Yeah, yeah, it definitely will make it difficult.
• 5:41
  SPEAKER_02: Yeah, and we've seen it.
• 5:42
  SPEAKER_02: We've seen it so many times.
• 5:44
  SPEAKER_02: And the other point as well, I want to make is sometimes people don't realize that even when you go back for top-up, yeah, like let's say they got a home loan, everything is good, and then something happens, something goes to the default collections agency, and then clients come back to us and they want to get a top-up for a car, a solar panel, whatever.
• 6:03
  SPEAKER_02: It's still a new credit event in the bank's eyes.
• 6:06
  SPEAKER_02: So just because you've got a mortgage already with the bank, it's not guaranteed that you'll get a top-up.
• 6:11
  SPEAKER_02: Correct.
• 6:11
  SPEAKER_02: You still have to be of a good character and show that you're still paying other bills as well, not just your mortgage.
• 6:18
  SPEAKER_00: Well, that default is on your credit check for seven years.
• 6:21
  SPEAKER_00: So it's a whole seven years that we we or you have to explain that story every time.
• 6:28
  SPEAKER_00: Yeah.
• 6:29
  SPEAKER_02: And I think sometimes people think that, oh, well, I already have a mortgage with the bank.
• 6:33
  SPEAKER_02: Surely they should just keep looking after me and giving me the top up.
• 6:36
  SPEAKER_02: No.
• 6:36
  SPEAKER_02: No.
• 6:36
  SPEAKER_02: Every time you want more money from the bank, that's in check.
• 6:39
  SPEAKER_02: Yeah, your credit check.
• 6:41
  SPEAKER_02: They check your credit check.
• 6:42
  SPEAKER_02: Awesome.
• 6:42
  SPEAKER_02: Well, we hope that this has been useful to you guys.
• 6:45
  SPEAKER_02: And if there is any other topic you wish for us to cover, let us know.
• 6:49
  SPEAKER_02: Thank you.
• 6:50
  SPEAKER_00: Thank you.