Are you planning to apply for finance soon?
Whether it’s for a new car, a new home, or renovations on your existing place, there’s one simple thing that may hamper your chances of getting the loan you need.
We’re talking about your credit score.
Think about it: before you put all that effort into your loan application, wouldn’t it be helpful to first know what information banks and other financial institutions can see about you?
Whenever you apply for finance, your lender will do a credit check to see if there are any skeletons lurking in your financial closet. And if there are, it’s a good idea to be prepared for them yourself.
It pays to check
Until recently, customers were only given limited information about their credit score, explains Mortgage & Finance Specialist Lisa Montgomery. This meant they may only discover potential problems on their file after they’d applied for a mortgage or other finance.
“It’s important to be credit aware and that’s what getting a credit score can do for you,” Montgomery says.
“It can help you negotiate a better deal … and if you come across something negative (in your credit history) it gives you a chance to correct it. You have a chance to query, resolve and repair it.”
The information in your credit score comes from a whole load of different sources – including the companies you use for your phone and data plan, TV, internet, utility bills, credit cards and loans. They all supply credit agencies with data about you, and this is used to build up an overall picture of how responsible you are as a borrower. Lenders use this to work out how much they are prepared to lend you, and on what terms.
Dragging it down
When you check your credit score, don’t be surprised to find that it’s a little lower than you expected.
You might have a respectable job with a good salary NOW, but if you’ve been irresponsible with your money in the past (unpaid bills and juggling several maxed out credit cards, anyone?), credit agencies will hang on to that information longer than you might like.
Even if this is the case, it’s good to be aware of your rating so you can research the kinds of loan you’ll be eligible for, and therefore how much you can afford to borrow.
And in the meantime, keep up your good money management so your rating keeps creeping up. You need to show those lenders they can trust you with their money.
Sometimes your score may be affected by incorrect information. Mistakes happen occasionally, and if you don’t check your credit score you’ll never know what may be dragging it down. If you spot any errors, you can apply to have your record corrected before the time comes to apply for your loan.
Knowledge is power when it comes to managing your finances. Talk to us – we’re your very ‘unordinary’ finance people.