20 Sep How to Improve Your Credit Rating Before Buying a House
When applying for a home loan today, much like the rest of the world, a credit score is taken into account before the individual is approved for the loan. Credit scores are a culmination of our payment responsibility, and how quickly and honestly we meet billing deadlines on our various credit cards and accounts. A bad score indicates an individual who is unable to pay off what they spend, whereas a good score indicates a fiscally responsible person.
According to Pioneer Credit, the average Australian credit score is 652 today, calculated on a scale of 1,000. If you feel like your score is even lower than that, fear not, there are things you can do to repair your credit before you take the first step in buying a home. Sometimes life can get the best of us and take a huge toll on our credit rating.
Here are a few ways to improve your credit score starting today:
Know Your Credit Score:
Checking your credit score is free – and it’s very easy to do. You can check your credit score for free using the national credit reporting bodies (CRBs) listed on the government website:Equifax Australia (formerly known as Veda):Equifax.com.au Phone: 1300 762 207Note: Equifax gives 1 free credit report a year and another within 90 days of a rejected credit application. Any other credit reports are subject to their payment plans.
You will have to provide identification information to find out your credit score, but you can do this very quickly and easily and you should be able to get an immediate indication of your credit score.
To obtain your credit report, you need to be formally identified.
You may be asked to provide your full name, address, date of birth, previous address, and/or driver’s licence number. A free credit report will arrive within 10 days of the request, but you can acquire it sooner if you’re willing to pay for it.
Spot the errors:
Did you know that 25% of people get declined for a mortgage as a result of errors on their credit report? Many credit card companies can claim you didn’t make a payment on time when in fact, you did. Every bureau has a manual on how you can go about correcting these mistakes – and we highly recommend that you start now. Disputing claims can prove successful, but take a long time.
Pay More Than Minimums:
Sure, you can pay the minimum off of your credit card balance every month. However, studies have shown that if you pay off the entire balance, you will receive a higher credit score overtime. If you have the funds to pay over your balance one month, do it. It will pay off in the end.
Pay On Time:
The last (no brainer) tip is to try and pay on time from here on out. If you’re spending more than you can cover, it’s time to consider a new budgeting approach to your finances. Give yourself a break and reel in the expenses where they don’t need to happen.
Being informed and taking positive action when it comes to your credit score is the best way to secure your financial freedom and achieve your dream of home ownership today.