By Graeme Salt
There’s heaps you can do to strengthen your mortgage application, long before you actually apply for a loan.
As soon as you submit a loan application, the bank will run a credit check on you. Your credit report has heaps of information on you – particularly how much debt you have and how good you are at making your repayments on time.
Your credit score gives you a rating based on positive behaviours (you get plus marks for making payments on-time, or even early). It also gives you negative marks if you have late payments.
Wanting to stay on the banks’ good side, I am conscientious with how much debt I have and how quickly I make the repayments.
Below is an extract from my credit file:
The role of the credit file is coming increasingly important in how banks assess your loan application. Over the past years, they have started pooling information on us and our repayment habits. Under the system known as Comprehensive Credit Reporting (CCR) the banks can see information on our debts with other banks, plus how good we are at making repayments.
And, the credit information available to them is only going to get larger. Today, Experian, a credit check agency, has said in the UK it will start adding UK tenants’ rental histories to credit scores. Given that the CCR system started in the UK before it did over here, you can bet your bottom dollar that we will have something similar in Australia in the future.
Put simply, it means that if you are thinking about getting a mortgage in the future, there’s plenty you can do now to strengthen your future application.
Thinking about buying a property now? Or in a few months’ time? Or even in years to come – it’s still best to tighten up your credit file now.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
