Your credit score has a huge influence on whether or not a lender thinks you are a worthy borrower.
So you’ve got your pay slips and bank statements ready. When it comes time to applying for a loan it’s good to have everything in order. But there’s one aspect many people overlook, their credit score.
We each have a personal credit score maintained by credit reference agencies, and it’s based on a number of factors noted in your credit record like how well you have a managed debts and bills in the past, how many applications you have made for credit; and whether you have any major black marks like personal bankruptcies or unpaid defaults.
Your credit score is very important! Each time you apply for a loan the lender will take a look at your personal credit score as a way of checking how responsible you are with money and paying your bills. Not only can your credit score determine whether you are approved for a loan, it can also impact the rate you pay.
Despite the importance of your credit score, industry research shows almost eight out of ten Australians have never checked their credit report. I can help guide you in the right direction for checking your credit report. But in the meantime, it pays to be mindful of three key factors that can negatively impact your credit score.
Making multiple loan applications
When you’re in the market for a home loan it can be tempting to submit loan applications to a number of lenders in the hopes that at least one of them will offer you a loan. It is important to resist this temptation.
Every time you make a loan application it’s listed in your credit report. Lenders who come across multiple applications can become weary that you may have been rejected by other banks.
A better strategy is to speak with your Mortgage Choice broker as I can provide support and guidance to help get your loan application over the line. It’s also a lot quicker than filling out numerous loan application forms.
Paying bills late – or not at all
Paying bills on time doesn’t just make good financial sense, it also keeps your credit score healthy. Overdue or unpaid bills plus late repayments on loans or credit cards are noted in your credit file, and this sort of information can make lenders nervous about your ability to manage a home loan. The best approach is to pay on time, every time.
Failing to keep tabs on your credit record
So, it’s quite clear there is a lot at stake with your credit score so it pays to review your credit record often, at least once a year. This lets you pick up any mistakes at an early stage, keep your personal details current if you move or change your name, and identify any possible attempts at identify fraud.
Contact me to discuss the implications of a bad credit report or if you need help to access our credit file.