One thing that financial institutions do as a matter of course when someone applies for a home loan is check the applicant’s credit rating. If your credit rating is more negative than positive, you run the risk of missing out on the loan ““ and potentially the house of your dreams. Here are some simple tips to help keep your all-important credit rating squeaky clean.
- Have a written budget. Without a written budget that shows us when large bills will fall due, many of us can find ourselves caught short when the due date rolls around. This can leave us relying on our credit card to plug the gap.
- Pay your bills on time. Any overdue bills worth more than $100 can be listed on your credit file as a default ““ even after they have been paid! If possible, pay your bills as soon as you receive them, either by filing them in date-due order or organising an automatic direct debit system of payment.
- Contact your creditors quickly if you are not able to pay on time. That way you may be able to set up a repayment plan and avoid a black mark against your name.
- Don’t pay more than you need to. Many of our regular bills ““ telephone, electricity, mortgage and insurances ““ are set-and-forget expenses. New products and service offerings are constantly being introduced though, so reviewing your major costs periodically and shopping around for a better deal could potentially save you a fortune. This will help to free up your cash flow and reduce the chance of you falling behind.
- Check your credit report occasionally. Your credit history is being continually updated as businesses record your financial movements. Administration mistakes can happen though ““ and the sooner you are aware of any errors in the information recoded against you, the easier it will be to have it removed. Make a habit of checking your credit report once or twice a year, to ensure that it’s an accurate reflection of your activities. You can order a free copy of your credit rating from from Veda.
- Check your credit report prior to applying for a loan. If you apply for a loan, the financial institution is almost certain to check your credit rating – as such it’s a great idea for you to check it first. That way you can ensure that there are no nasty surprises and can also prepare yourself for any questions that financial institution may have.
Your credit rating may not always be perfect, but keeping it as trouble-free as possible will maximize your chances for obtaining credit down the track.