How Your Credit Score Can Impact the Interest Rate on Your Home Loan
The Most Common Reason That You Can’t Get The Best Interest Rate.
One of my team members pointed out to me the other day that according to Equifax, 40% of the credit active population have a credit score of ‘average’ or ‘below average’ – a single default will place a consumer in this category. Another thing that can lower your credit score is regular credit card and personal loan applications. Even worse, are regular applications with pay day type loan lenders. That will kill your credit score!
Defaults and other ‘black marks’ stay on your credit file for up to seven years.
When applying for any type of mortgage your credit file will be reviewed. Unfortunately, those borrowers with below-average credit scores may struggle to get access to the best interest rates on the market. Meaning they will have to pay a higher interest rate on their mortgage or any other type of loan they might want.
What is a below-average credit score? As a rule of thumb, if your credit score is less than 600 a number of lenders won’t consider your application. All is not lost though if your credit score is less than 600. There are some mainstream lenders who put less emphasis on the credit score on your Equifax report and consider each application on its merits.
Not All ‘Black Marks’ Are Created Equal.
The truth of the matter is, that if you do have a black mark or two on your credit file, then you have options other than just waiting 5-7 years until they are no longer on your file. There are ways to have your file cleaned up to allow you to access those better interest rates – so that your dreams are not as expensive or difficult to obtain.
We do see our share of clients who have ‘bad credit’ and would like to know what their options are when it comes to obtaining a mortgage. One of the first steps is to review their ‘black marks’ and see if they can be repaired. This will open up a lot more options for our clients – in many cases give them access to much better interest rates than they would have otherwise gotten.
We have access to credit repair companies that may be able to clean up your credit report for a single refundable flat fee. Many credit repair companies charge a ‘per mark’ fee rather than a single flat fee.
If you have had a home loan (or other loans) turned down because of bad credit, we can take a look at your situation and see what your chances are of your credit file being cleaned up – not everything can be cleaned up, but for a lot of marks placed on files, there is scope to have them removed because there was some sort of extenuating circumstances.
To get started call 1300 661 211 or register online at https://www.mortgageworldaustralia.com.au/contact-us/ we can review your circumstances and see if there is a way to help you.
Patrick is a Director and a Home Loan Specialist. He has been helping Australians with home loans since 2001. Prior to working as a mortgage broker Patrick was employed by Macquarie Bank for 3 years and also worked as an accountant for a publicly listed company. Patrick’s qualifications include:
Bachelor of Business, UTS Sydney. Majored in accounting and sub-majored in Finance and Marketing.
Diploma of Finance and Mortgage Broking Management FNS50310
Certificate IV in Financial Services (Finance/Mortgage Broking) FNS40804
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