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How Your Credit Score Affects Your Home Buying Costs

Credit Score Affects

Buying a new home is a tricky endeavor. It involves looking at various options, finding the right house that suits your budget and finally, applying for a loan. And then, you are denied of that? Why? Because your credit score is too low. How come this figure matter so much? Well, your credit score gives the lender an estimate of the amount you can repay monthly. So, what criteria does it operate on? Let us find out all about having a good credit score and applying for mortgage.

What is a Credit Score?

A credit score is a four-digit figure that conveys your credibility to the lender in repaying the loan. It holds you accountable for your past purchases and payments. The lower the credit score, the more is the risk of defaulting in repayment of your debt on time. It is a picture of your entire financial history.

What All Things Sum up to Make the Final Score?

Credit bureaus, credit card companies and banks, that are your potential lenders, utilize various methods to calculate your credit score. It includes mortgage, education loans, car loans, line of credit and business loans. Veda is the largest credit reference bureau in Australia and assigns a ‘VedaScore’ to people based on their credit history and the type of lenders they’ve dealt with in the past.

Every transaction you made from your account is used to calculate your score depending what profit or loss your action brought to the bank. The scores range from 0 to 1200. The higher you score, the higher goes your reliability as an applicant.

Why is it Important for Buying a House?

An average Australian has a score of 649. The older you are, the bigger score score is expected from you. Since your credit score depicts your ability to repay a loan, a poor number can lead to outright rejection! The lenders are discouraged by your low score and thus a higher score is necessary to purchase your dream house with benefits.

What Affects Your Credit Score?

Your credit score is affected by anything that is negative on your credit history, such as:

• A high amount of pre-existing debt
• Late repayments of previous mortgages, be it a credit line or a personal loan, or delayed payment of bills
• Absence on the electoral register
• Any association with a joint mortgage system with a person who has a poor credit score history will also affect your credit score.

It is much easy to earn a higher credit score if you stay in the same house for a minimum period of one year.

Are There any Bypass Routes to get a Home Loan with a Bad Credit Score?

At times, even when you owe no debt or you have learned from your past mistakes, your credit score refuses to reflect it. However, it is not impossible to get a mortgage loan with a bad credit score. There are certain ways in which one can still apply for home loans with a bad credit score.

• You can look for an alternative lender who does not consider credit score. However, it is necessary to assure yourself that there is no scam involved in the entire process. Try and consider adjustable loan rates that can be offered by the lender. Refuse a pre-payment penalty that allows the lender to collect extra money if you pay your mortgage before the due period.

• One of the best ways to avoid the mark of a bad credit score is to make a large down-payment. An excess amount of cash comes handy to assure the lenders that you will pay back your mortgage within time.

• Another option includes a co-signer who is equally responsible for your debts, although, this might lead to putting a dear one under unwanted circumstances if you fail to repay.

How can one Ensure that their Credit Score Improves by the time They are Ready to Purchase a House

• Keep a tab on your credit score. Check for errors and discrepancies and report it to the credit bureaus immediately. Monitor your credit and debit payments, email addresses and phone numbers. Any error in documenting your personal details can confuse your identity with someone else’s.

• Check for address thoroughly. Any alternative address might suggest a fraudulent activity under your credit.

• Stick to one bank for a longer period of time (more than a year) where you commit to pay off debts regularly and without delay.

• Do not postpone repayment of debts.

The essential step to get a low interest rate on your future home loan is to pay back on time, each time you take a loan for utilities, education or mortgage. It is necessary to maintain a good track record to result in a higher cumulative credit score. So, as soon as you decide to buy your dream house, begin working on that nasty credit score of yours. You will reap the benefits of a good credit score in future with lower rates of interest that you would pay off easily.

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Siraj Ahmed
Siraj Ahmed
2020-11-18
Verified review
Excellent service. Got us a great loan option and also worked with the bank to get the loan approved during the heights of COVID.
Dhruv Satra
Dhruv Satra
2020-11-18
Verified review
Malaka Ekanayake
Malaka Ekanayake
2020-11-10
Verified review
We have had a very pleasant experience working with Opulent Finance. We did not have that much experience with house loans as we were first home buyers but working with Opulent  Finance team specially with Ishara, made that experience stress free one. She helped us secure an incredibly competitive interest rate and offered her guidance so we can take advantage of the future interest rate drop. Thank you Ishara, Dayan and team for your incredible support and we have no hesitation what so ever in recommending Opulent Finance for your financial needs
Uma Gunaratne
Uma Gunaratne
2020-11-04
Verified review
Ishara is highly knowledgeable and if you are a first home buyer and new to the intricacies of all that home loans entail, she will really take you under her wing and impart her knowledge and experience and treat you as one of her own. She is also extremely patient but will also be very truthful and upfront in situations which is honestly what you need. She did a very complicated loan for us, and was so incredible efficient and organised with all the paperwork that was required. Not only that, she helped us secure an incredibly competitive interest rate! Ishara has probably spent hours and hours explaining to me details and giving me really good guidance through this momentous period in life! During the cooling off period and settlement, she was constantly chasing up our loan and honestly took a personal interest in the outcome. Our solicitor was also very happy about working with Ishara as she was following the entire process, was always up to date and very easy to work with. Considering that our entire process happened during the covid-19 lock-down and work from home environment, we have nothing but good things to say about how professional Ishara was as she didn't let a single thing slip. We are so glad that we have both Ishara and Dayan in our corner. We will definitely be using them for all future financing needs. Thank you Ishara, Dayan and team!
Harsha Ill
Harsha Ill
2020-10-11
Verified review
Opulent Finance gave professional advice for my unique home loan requirement. They respond quickly with the proper information. The process was smooth and I felt comfortable to deal with the team. The team is friendly and professional to deal with. Highly recommended for any one looking for finance.
S P
S P
2020-09-22
Verified review
I have been dealing with Ishara at Opulent Finance for over 6 months now and she has been faultless. She has helped me secure a loan pre-approval in no time and assisted me with my property purchases. I could not recommend Ishara highly enough.
Afshin Koohestani
Afshin Koohestani
2020-09-22
Verified review
Good service and offers.
Janaka Kumara
Janaka Kumara
2020-08-22
Verified review
A big shout out to Dayan and his team for the seamless service provided during the refinancing process. Thoroughly professional team that pays attention to every detail and has been extremely transparent throughout the process. A team that always has the best interest of clients in mind and makes all efforts to provide the right advise and outcomes to the clients. Highly recommended!
Rakesh Mistry
Rakesh Mistry
2020-08-19
Verified review
They called me back with solution
Indra Jaya
Indra Jaya
2020-08-12
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