Good Credit Rating, Better Home Loans
People with good credit ratings could eventually pay lower interest rates when taking out a mortgage because of recent changes made in Australian credit standards
Lenders are now able to obtain a much more comprehensive picture of your repayment behavior. How it works is that reporting agencies will analyze your repayment patterns and then give you a numerical score based on their findings. Currently we do not know exactly how banks and financial institutions will use this information.
What we do know is that you will be at a great advantage if you pay your minimum monthly credit card obligations as well as all loan repayments on time. The more late payments you make the worse your score will be and in turn you will be considered a higher risk customer.
Eventually most Australian’s will have a credit worthiness score. This will be based on more extensive data collection which began on the 12th March 2014. All payments which are made more than 5 days late will be recorded as a black mark on your credit file.
Simply put, you do not want the words “missed payment” noted on this file. This could impact on your ability to borrow money at competitive rates and limit your room to negotiate with lenders.
To protect your credit rating, it is important to make ALL payments on time. If you have problems meeting these commitments you should contact your credit provider to arrange an extension of time to pay.