Do You Know What Your Credit Record Says About You?

Have you ever actually seen it? It can be quite a surprise for many borrowers to learn that a few blotches have appeared on their credit history reports over the years.

Unfortunately, many are blissfully unaware until they apply for a home loan. Once your application has been lodged, it can be tricky to challenge your credit report and prove your worth to the lenders.

Stay ahead of lenders by reviewing and improving your credit record today.

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1) Review your credit record

The first step is to get your hands on a copy of your credit history report.

This can usually be done through your mortgage broker, or by directly contacting a Credit Reporting Body. There are quite a few companies that can provide your credit report to you, but the national bodies are Veda, D&B, and Experian.

2) Challenge any discrepancies or misunderstandings

If you think that there's a discrepancy in your credit history report, you can challenge these.

The first step is usually to contact the company that added the incorrect information to your report and see if they can amend it.

Failing this, you can dispute the discrepancy through a Credit Reporting Body.

3) Be honest

It pays to be upfront with your lender about anything on your credit report that could impact your ability to borrow.

Most lenders are fairly strict, but some will take into account your explanation credit issues, and the steps you took to resolve them.

4) Cut down debt and credit

Before you apply for a loan, try to reduce the amount of credit card debt - and also available credit that you have.

Some borrowers are surprised to learn that a credit card with no debt owing at all - but with a high limit, can have an impact when being assessed for a loan.

Try to reduce your limits wherever possible, or if you don't really use the card then consider canceling it.

5) Know your finances

Come to the first meeting with your lender or broker, prepared to explain your budget, expenses, income, and your capacity to repay the loan.

It's also important that you demonstrate savings, as most lenders will require at least 5% of the purchase price in order to approve a loan. When it comes to the deposit, the more you can pay upfront, the greater your chances of being approved for a loan.

If you can put down 20%, you will remove the need for Lenders Mortgage Insurance (LMI) which could represent significant savings for you.

By taking these steps, you’ll boost your credit score and improve your chances of securing a home loan. Start preparing today for a smooth path to mortgage approval!