When you’re applying for a home loan, whether it’s with the experts here at Home Loan Cash Back, or by yourself, you should know that your lenders are going to be looking at a lot of different factors. They’re not just interested in the property that you’re going to be buying, but also what your position is as a borrower. For instance, are you going to be reliable, trustworthy, and consistent?
One of the key things that any lender looks for when assessing the suitability of a home loan applicant, is their credit score. The difference between having a good credit rating, or a bad one can make a huge difference to your loan. For instance, you might get approved for a loan with a mediocre credit score – but you can bet your interest rates won’t be as good as they would have been if you’d improved your score before applying.
What is a Credit Rating?
So, what is a credit rating anyway? Well, your credit rating is a collection of all the different things that come together to describe your spending history. For instance, it’ll show lenders whether you have a habit of paying your credit card debts off on time, or whether you’ve every applied for a loan before.
All the credit information you have gathered over the years, from personal loans, to credit limits, and repayment histories, is all public information that lenders can access to decide how much of a “risk” you are. The bigger a risk you appear to be, the more likely they are to reject your application for a home loan.
Help, my Credit Rating is Poor!
If you’re credit rating isn’t great, that doesn’t mean that you’re at the end of the road in terms of getting a mortgage. However, you might want to take a few steps to improve your score before you make an application. Trying, and failing to get a home loan can leave even more black marks on your record – and that’s the last thing you want.
The most effective way that you can turn your credit score around, is also the slowest way too. Simply put, you’ll need to make sure that you pay off all your debts on time. Whether it’s paying for your mobile phone each month, or meeting your credit card bills, the more that you show your banks you’re a responsible spender, the more your credit rating will grow.
Other Ways to Improve your Credit
There are other ways that you can improve your credit rating, besides waiting for the score to improve. Credit isn’t stagnant, so you always have a chance to turn things around. For instance, you could try getting a credit card if you don’t already have one. You might think that the less debt you have, the better, but having a credit card shows that you’re managing your limits responsibly.
Keep in mind, we’re not recommending that you go out and rack up a credit card debt. Instead, just use your credit card to make a couple of purchases, then pay them off immediately.
Another way to prove yourself as a low-risk borrower, is to highlight your stability. While stability I s sometimes subjective, it’s a good idea to show lenders that you’re able to hold down a house and a job. For instance, show them that you can pay your rent on time, and that you’re getting a consistent wage every month.
Getting your Home Loan
Repairing your credit rating isn’t a quick-fix situation, but that doesn’t mean that you can’t start taking action as quickly as possible. The faster you start working on your credit rating, the quicker you’ll begin to see the results.
Once you’re ready, you can come over to Home Loan Cash Back, and we’ll help to make sure that you’re getting the best mortgage deal – with all the cash back you could want!
