Now that banks are using comprehensive credit reporting as part of the loan application process it has become crucial to maximise your credit score and choose a broker carefully.
What is a credit report?
A credit report is an extensive record of all your finance enquiries. It includes any missed or late payments for things such as phone and electricity accounts as well as credit card and mortgage commitments.
It also includes every single credit application submitted.
If you have applied for a few home loans and either got knocked back or decided not to go ahead, it doesn’t leave a good impression on your credit report.
The same applies if you have missed or delayed any bill payments or loan repayments.
What is comprehensive credit reporting (CCR)?
In a recent move, banks and lenders will now use comprehensive credit reporting as part of the application process.
CCR offers a much more detailed picture of the borrower’s financial commitments, and doesn’t just look at negative hits recorded for missed payments.
If your lender does a comprehensive credit report on you, you will need to provide statements for every account held over the past six to 12 months, as well as evidence of all assets and liabilities included in the loan application.
How can you prevent against a poor credit score?
Here are some tips to ensure you put your best credit foot forward when applying for a loan:
1. When shopping around for a loan or a credit card, make sure you have a clear purpose and are confident with where you are heading.
2. Avoid submitting loan applications unless you are sure you are eligible and will follow through with it.
3. Be wary of mortgage brokers that may submit applications to multiple lenders instead of submitting enquiries.
4. Choose a mortgage broker who will research the best loan for you based on their knowledge of a range of products from different lenders. The application you then submit should be the application you will proceed with.
5. Stay on top of all of your financial commitments. The best way to do this is to set up direct debits for all of your bills and repayments. Make sure you always have enough money in your bank account to cover them. This will create a positive impression on your bank statements and improve your credit score.
6. If you have forgotten to pay a bill on time make sure you pay it ASAP to prevent a negative mark from occurring on your credit report.
7. Make sure you have no gambling, or other financial expenses deemed ‘risky’ by lenders, showing on your bank statements.
Disclaimer: Please note that the information given in this video blog is only applicable to a number of scenarios and may not be relevant to your financial situation. For more tailored information regarding your own credit report, we would urge you to seek advice from a professional who is privy to your personal circumstances and can give information specific to your financial situation. Please get in contact with our team if you have any questions regarding your own credit report, or would like any help regarding your own finances.