Your credit score plays a significant role in your loan application. So, if you’ve never bothered to check your credit score before, it’s time to do so. Doing so can have a significant impact on your life, especially if you want to buy a house through financing.
Lenders use credit scores to determine the risk of providing you with a loan. It’s an automated system that uses your credit history together with the information that you’ve included in your application.
It’s challenging to determine the actual credit score that you need so that you can qualify for a mortgage. That’s because most Australian lenders don’t publicly show their credit criteria. Also, most lenders base their approvals on various factors other than your credit score.
There isn’t any specific range that will tell you if you’re qualified for a loan. But Equifax has benchmarks that you can refer to for further information.
If a person’s scores drop below 509, financial institutions will consider you a high risk. Once that happens, it will be difficult to acquire financial assistance from conventional lenders. Some banks would grant people with this credit score with a home loan. But the interest rates associated with the loan usually are very high.
At least 20 to 40% of all Australians have credit scores between 510 and 621. If you have an average credit rating, it means you have some negative notes stored on your file. If that’s the case, then you need to send additional requirements to get your loan approved. However, remember that most financial institutions would still need to do their evaluation. Additionally, they’ll also review your income when approving your mortgage.
Having a credit score that’s between 726 and 832 can put you in good standing when it comes to dealing with lenders. It also gives you a better chance of getting approved for a mortgage that has lower interest rates compared to those with average credit standings.
People who have credit ratings of 726 to 832 are on the top 40% of Australians whom banks consider as creditworthy. Most financial institutions are more than happy to help these people with their home loan. It’s an ideal score to have, especially if you’re looking for a great house and land for sale in Whittlesea and nearby areas.
Meanwhile, those with 832 to 1200 credit scores have meager chances of getting their loan default. If your credit score falls in this range, then you wouldn’t have any problems applying for a loan.
Factors that give you a bad credit score
Several factors can affect your credit scores. So, it wouldn’t be difficult to find out which ones can improve it and which ones can harm it. One of the things that can harm your credit scores is late repayments on credit cards and loans. Even missing repayments entirely can also affect your credit history.
So, if you’re applying for a loan, ensure that you have an ideal credit score to get your application approved. If your credit score is less than perfect, then it’s best to work on it immediately.