It’s important you have good credit history if you are looking to take out a home loan in a short to medium term.
Your potential lenders will assess your credit history and see if you are a good borrower. If there is evidence in your history of late and default payments, this could sway your lender to decline your request to borrow money.
If you do have an unsatisfactory credit history, don’t worry too much. There are a few things you can do to improve your credit score, and help you on your way to obtaining finance.
Pay it all off: You should try and limit the amount of credit card debt you have. Pay them down as fast as possible. Tighten your household budget while you’re paying down your debts to help speed things up. Aim to pay revolving credit like credit cards as quickly as possible. It might even be worth cancelling the card once you’ve cleared its debt.
Create good habits: Leave bad habits from your past in your past. If you have a history of late payments, make sure that they are always on time from today forward. Ensure every single bill is paid on time. Create good habits and stick to them. Around 35% of your credit rating is determined from your payment history, so it’s important you keep it positive.
Keep old accounts: think again before you close your old bank accounts. Closing these accounts can decrease your credit rating because a long credit history is considered to be beneficial, so keeping old accounts open can make your overall history as lengthy as possible.
Be careful of new debt: make sure you only apply for credit when it’s absolutely necessary. Applying for a credit card or loan will be reflected on your credit report. Making lots of applications in a short amount of time can negatively impact your credit history, as will opening many new accounts.
Keep a good mix: it’s always a good idea to keep a mixture of credit types to demonstrate you can handle different types of credit. Auto loans, personal loans, mortgages and credit cards are examples of different types of credit.
For more information on how you can improve your unique situation, give us a call at Mortgage Choice Woolloomooloo on 02 9358 4855