Do You Know Your Credit Score?
No matter how much of a deposit you have a credit check can be the make or break of any home loan application. Even if you’ve been diligent with your budgeting, regularly saving & not overdrawing your account, an unexpected surprise from the past can sabotage your home loan dreams.
Unexpected credit check surprises are often hangovers from our younger years, when we're first heading out flatting learning to manage our finances, & our priorities weren’t quite the same as they are now. Or a time when we’ve experienced some level of financial hardship, job loss, illness etc.
Some of the items we often see crop up are forgotten credit cards, gym memberships, phone bills, or power company bills.
In New Zealand we are lucky enough to be able to check our credit information for free. If you’re planning on applying for any lending & are unsure if there are any 'skeletons lurking in the closet', we’d highly recommend requesting a copy of your credit report. This will potentially save you a lot of time, give you the opportunity to rectify any issues & avoid multiple lending company enquiries being recorded on your credit check – which is often a red flag for a lender.
There are 3 credit reporting companies where you can get a free copy of your credit report
WHAT’S IN MY RECORD?
Your record will include you’re your payment history for:
- Credit cards
- Home Loans
- Car Finance
- Hire Purchases
- Any bills such as power, electricity, phone accounts, internet etc
You’ll also see a rating between 0-1000 that indicates to any potential lenders how credit-worthy you are, & likeliness you will make repayments on time. The majority of credit scores range between 300 and 850. The higher your score the better your credit rating is.
If you’re credit score is low then we recommend taking the time to find out what’s effecting it & work on remedying it as quickly as possible.
For some tips on getting your credit rating back on track take a look at this article
WILL I EVER BE ABLE TO GET A LOAN?
Just because your credit score maybe impaired & not qualify you for a home loan with certain lenders, this doesn't mean you won’t ever get a loan.
There are lenders in New Zealand who provide home loan options for those with less appealing credit scores, however it does come at a cost. They are known 2nd Tier Lenders, & will take on what is considered higher risk borrowers although they will charge a higher interest rate to do so & there maybe additional fees such as application fees or early repayment fees.
Additional information in regards to Debt & Credit records can be found within the New Zealand Government consumer rights portal