Essential to Keep Credit Score Squeaky Clean
A tougher lending environment and changes to the credit reporting system has put the onus on home loan and business borrowers to ensure they have a ‘squeaky clean’ record when seeking finance, says leading mortgage broker Loan Market.
Loan Market Melbourne broker Alexander Heifetz said one of the main reasons consumers have a mortgage application declined is due to the number of enquiries on their credit file.
“When it comes to borrowing funds, having a good credit history is vital,” Mr Heifetz said.
“Recent changes to the credit reporting system mean that businesses and individuals seeking to borrow money need to have a squeaky clean record in terms of meeting loan repayments and paying bills on time, or risk being refused finance.
“Every individual and business has a credit record based on collected data, and even those that are aware of this may not know what it actually says or how much information is on file.
“So it is important to consider this carefully before lodging any application with any financial institution.”
Mr Heifetz said each credit request whether it is for a mortgage, business loan, personal or car loan, or credit card is registered in an individual credit file and can have an impact on personal credit history.
“Credit scoring becomes one of the major issues in loan approvals,” he said.
“A lot of people might find themselves trapped due to previous chaotic credit activity to which banks become very sensitive.
“If you have a high number of enquiries on your credit file it can result in you failing the credit scoring system and having a loan application rejected, even if you are in a good financial position.”
Mr Heifetz said other factors considered by lenders include employment history, residency status, age, level of personal debt as well as the applicant’s asset and liabilities position.
He said most home loan application problems are avoided by organising finance upfront and having pre-approval in place by using the services of an expert mortgage broker.
“A specialist finance broker will understand customers’ needs, check/verify credit history and submit the application to source the best solution and home loan product and obtain loan approval the first time,” he said.
Further enquiries call Alexander Heifetz on 0421 892 080