Your credit score is a computer-generated evaluation of the risk you pose to a creditor, specifically in relation to your home loan application. It is based solely on data from your loan application and credit history, with no human involvement. With the ongoing pandemic, it is important to take steps to safeguard your credit score, and we have provided some advice on how to do so.
What is shown on my credit file?
Your credit history is recorded in a credit file by credit reference agencies like Equifax, previously known as Veda Advantage. The information in this file comprises of your loan application history, loan defaults, bankruptcy, and other unfavorable events. Additionally, since 2014, your credit file also contains positive credit reporting data, such as your timely repayments on existing debts. This provides lenders with a more precise understanding of your current financial situation. Although your credit file may have a credit score, lenders will generate their own credit score based on the information in your credit file.
Why did I fail credit score?
Although there are various reasons why a loan application may be rejected, the primary cause is often falling short of the minimum approval score set by the lender. Regrettably, lenders have their own undisclosed methods for calculating credit scores. Nonetheless, some of the typical factors that lead to a low credit score are having a poor credit history, insufficient authentic savings, instability in terms of employment or address, and making late or missed payments.
How can I improve my credit rating?
If you have a low score when applying for a mortgage, it is likely due to two or three aspects of your application. By addressing these issues, you can improve your score and reapply for a mortgage. If your credit file is problematic, credit repair experts can help remove any incorrectly or unfairly listed defaults. To boost your credit score, avoid overdrawing your credit card, make timely repayments, pay off any defaults on your credit file, maintain your current job and address until applying for a loan, and demonstrate financial responsibility by regularly depositing funds into a savings account. In some cases, it may be simpler to seek a loan from a lender who does not employ credit scoring.
Which lenders use credit scoring?
Although most lenders in Australia rely on credit scoring, there are a few who don’t. We have information on which of these lenders are more likely to approve loan applications, even if the applicant has a poor credit history. Alternatively, it may be beneficial to apply with a lender who will view your circumstances more positively. For instance, some lenders prioritize stability and may not approve those who have recently started a job, while others may accept such applicants but not those with defaults.
Our expert mortgage brokers know how banks think and can help you improve your credit score! We also know lenders who don’t use credit scoring!
Please contact us to discuss your specific circumstances.