One clean file, one with a mark on it
A couple buying their first home in Burwood had two very different credit files. Hers was spotless. His carried a paid telco default from four years earlier that he had genuinely forgotten about until it appeared on the credit report. The question they arrived with was whether she should simply apply alone.
The situation
Combined income of $184,000, split roughly evenly. A 14 per cent deposit saved jointly. The default was under $1,000, paid in full two years after it was listed, with no other credit events on either file.
The problem
Applying in one name halves the assessable income, which on this file cut the borrowing range by roughly a third and put the suburb they wanted out of reach. Applying jointly meant the default came with them. Neither option is obviously right, and the choice deserves numbers rather than instinct.
What made it difficult
Lender attitudes to a small paid default vary far more than most borrowers expect. Mainstream lenders differ on age, size and whether it was paid, and some will look past a small, old, settled default entirely where the rest of the file is strong. Specialist lenders will certainly look past it, at a price. The mistake is assuming the specialist path is the only one, and paying for it unnecessarily. Our credit history guide covers how the tiers work, and buying with a partner covers the joint-application questions.
What a broker assesses
Both credit files pulled and read properly first, because borrowers are frequently wrong about what is actually listed. The default's age, size and paid status, which together decide which tier of lender is realistic. The solo borrowing range calculated honestly, so the trade-off is a number rather than a fear. Whether waiting for the listing to drop off is realistic against the market, and what that wait costs. And ownership structure if they do apply in one name, because the person on the loan and the people on the title are separate decisions with real consequences.
Illustrative sequence, the order and availability depend on the actual file and lender policy at the time.
The lending considerations
Applying in one name to dodge the problem carries consequences worth stating. The non-borrowing partner may still go on the title, which most lenders permit, but they take on ownership without the loan, and the borrowing partner carries the full liability alone. That is a legal and relationship conversation as much as a lending one, and it belongs with a solicitor before settlement, not after. Where the default is recent, large or unpaid, the honest answer changes: paying it and waiting is often better than borrowing at specialist pricing, and a broker who will not say that is not being useful.
What borrowers can take from this
Do not decide before you have both numbers. Pull both credit files, get the joint and solo ranges priced against real lender policy, and then choose. A small, old, paid default is a smaller obstacle than most people fear, and the expensive mistake is usually the assumption, not the default itself.
Related guides
This is an illustrative example scenario, not a description of a specific client and not a testimonial. The figures are realistic but rounded, no lender is named, and no outcome is promised, every application is assessed on its own facts. General information only, not credit or financial advice.
Get both numbers before you decide.
Twenty minutes with Charles: what the two of you could borrow together, what one of you could borrow alone, and which lenders read a paid default the way yours deserves.
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