Case study: approved with two defaults after two bank declines

The situation

A couple with a combined income of $141,000 and a 12% deposit. On their credit file were two defaults from a period of illness three years earlier — a $1,850 telco default and a $3,400 personal loan default, both paid in full about two years ago. Their Equifax score sat around 480.

They had already applied to two major banks. Both declined, and both enquiries were now on file, making the third application harder than the first.

The challenge

• Two paid defaults still visible on the credit file for another two to three years
• A low bureau score triggering automated declines at major banks
• Two recent credit enquiries from the failed applications
• A genuine but undocumented explanation for the original arrears

What we did

We pulled all three credit files first — Equifax, Experian and illion — to see exactly what each lender would see. One report had an error, which we had corrected before proceeding.

We then built a written explanation supported by evidence: medical documentation covering the period, proof both defaults were paid in full, and twenty-four months of clean statements showing no missed payments, no buy-now-pay-later use and consistent savings.

That file went to a non-bank lender that assesses credit conduct manually rather than running a bureau scorecard. They approved $465,000 at a rate about 1.1% above prime pricing, with no restriction on refinancing out later.

The outcome

• Approved for $465,000 with two paid defaults on file
• Rate approximately 1.1% above prime — a premium, not a penalty rate
• No early repayment restrictions, so refinancing later is straightforward
• Documented exit plan: refinance to a mainstream lender at around 24 months

Why the exit plan matters

A specialist loan should be a bridge, not a destination. At roughly the two-year mark, the defaults age further, the clean conduct on the new mortgage becomes the dominant signal on their file, and the loan can typically be refinanced to a mainstream lender at standard pricing. We set the review date at approval, not afterwards.