Have you applied for a home loan to buy a new property recently? Maybe you're thinking of switching lenders or refinancing your loan? If so, you will have to undergone a credit check to satisfy the lender that you are a responsible borrower with a good history for repaying back what you owe.
Your Credit History
In Australia our credit data is held by Veda Advantage, which provides a positive and negative scoring system. Banks use this information to assess your credit worthiness, such any previous personal loans, mortgages and credit card repayments over the last 2 years.
What does this mean for most? If you pay your loans on time, having a positive credit score will be rewarded with potentially better term and ultimately lower mortgage rates and fees.
Maintain a Good Credit Score
Because banks will rely more on your credit score to access your loans, here are some ways to sure that you maintain a good credit score:
Make sure that you make all your repayments on time. Even if you've had a negative score in the past, making consistent repayments shows that you are responsible and in charge of your finances.
“Previously credit reports had identified negative details, defaults and bankruptcies. Now lenders will have a real indication on how good a consumer is when it comes to their financial affairs." says Robert Projeski of Australian Mortgage Options.
The easiest way to make sure that you consistently make repayments on time is to set up direct debits for all of your bills, such as your credit card, home loan or phone bills. “If you are behind on repayments this information will be more transparent and this can affect your standing when you apply for credit.”
Projeski also goes on further to add: “I would suggest people look into the options such as setting up an offset home loan account or perhaps using lump sum payments such as tax returns to get ahead on your repayments now and stay ahead".
Review your Credit History
If you're worried about your credit history, ask your your mortgage broker for advise or alternatively you can check your credit file through Veda Australia. You can get an idea of your score by using their free report, or delve deeper with their paid service.