When you're in the market for a home loan it's natural to assume lenders are mainly interested in your income. So it can be surprising to learn that banks are also keen to take a look at something else - your credit record.
Each of us has a personal credit history maintained by credit reference agencies like Veda or Dun & Bradstreet. This record shows some of the basics – like our name, age and address, but the part lenders are chiefly interested in features details of how well we have managed debt in the past. Since March 2014 credit reports may also include details of your regular repayment history on home loans and credit cards.
Keep tabs on your credit record
It all adds up to make your credit record is a valuable asset when it comes to securing loan approval.
Not surprisingly, having a credit history that looks a little shaky or has a few dents, can see you knocked back for a loan.
So it's definitely worth checking out your credit record before applying for finance. The trouble is, many people don't. In fact, it's quite common for borrowers to discover for the first time that there is a problem with their credit record when their loan application is rejected.
This is a key area where your Mortgage Choice broker can help. We can request a copy of your credit report on your behalf. It's a free service for you, and quite frankly, it is a step you should take at least annually - even if you have no immediate plans to apply for a loan. Unfamiliar entries on your credit record could be an early indicator of identity theft, where crooks have used your details to borrow money in your name.
Simple steps for a healthy credit history
There are also steps you can – and should – take to keep your credit record in great shape. We can help you here also, but as a guide, it can be worth:
- Scheduling loan repayments to match pay days
- Minimising the number of loan applications you make (these also appear on your credit record and multiple applications can suggest you've been rejected by other lenders), and
- Closing any credit card accounts you don't use.
To see what's in your credit record contact your Mortgage Choice broker today or take a look at our fact sheet for more information.