It might seem like it’s harder than ever to get a home loan with the recent tightening of lending policies from the Big Four banks and other lenders.
Then with the outcomes of the financial services royal commission still being digested against a backdrop of the recent correction in Australia’s housing market, homebuyers can be forgiven for feeling a little uncertain.
More than ever, when you apply for a home loan, it pays to be organised to ensure your application is successful and goes as smoothly as possible.
One of the most important things you should do as a borrower is to look at ways to manage your credit reputation and that’s where Credit Savvy comes in.
Know your score
Simply put, your credit score is a numerical representation of your credit reputation. The higher the score, the better you can look to lenders.
That’s why it’s important to know your credit score and credit file information and put your best foot forward before you apply for your next loan.
Your data is already out there
Lenders are already sharing your credit history information with the credit reporting bodies and they use this information to help them decide whether to approve or decline your home loan.
With the introduction of Comprehensive Credit Reporting, additional information about your repayment history and your credit accounts is also being shared. This gives lenders a more holistic and accurate view of your credit reputation.
See exactly what the lenders see and learn how to take advantage of your score.
You could access better rates and deals
A good credit score can give you more bargaining power when negotiating the terms of your loan with your lender. You may be able to negotiate a lower interest rate or have some fees waived.
Lenders want to be sure that you’re going to pay back your loan. So, having a good credit score and being able to show a history of making all your repayments on time could also help you get approved for your next loan.
Shop around to find the right home loan for you.
Improve your credit score before you apply
Finding out where you stand is the key to utilising your score. Your credit score is dynamic so it may change month to month as your financial circumstances change.
Perhaps you have a black mark on your credit file, and you need to wait for it to drop off before you apply for your home loan. Therefore, tracking and continuously working towards improving your credit score is important, as it could impact the outcome of your application.
Protect yourself from identity theft and errors
To maintain an accurate and up to date credit history, it’s vital that you actively monitor your credit score. A sudden change in your score can help alert you of any errors on your file or possible fraudulent activity.
If you plan to apply for a home loan, you don’t want to be caught out by incorrect information listed on your credit file that could potentially lead to your application being declined.
5 savvy tips that could improve your credit score
1. Make an honest assessment of your finances and only borrow what you can afford to pay back.
2. Before applying, consider what type of credit you are applying for, who the credit provider is, and the impact this could have on your credit score.
3. Limit the number of credit applications, as multiple applications in a short timeframe can lower your score.
4. Demonstrate good financial responsibility by making all your repayments on time.
5. Actively monitor and check your credit file for errors, making sure to alert lenders and credit reporting bodies if you believe the information is incorrect.
Credit Savvy gives you access to your credit score and credit file information, for free. We can help you understand what’s behind your score, learn how to improve it and receive alerts whenever there are changes to your credit file.
With credit information from Experian, one of Australia’s official credit reporting bodies, Credit Savvy is here to help you stay on top of your score and guard you against anything that shouldn’t be on your file.
Ready to Get Savvy? Start managing your credit reputation with Credit Savvy today.