How Your Credit History Impacts Your Loan Application

January 20, 2017 Sam Saggers

If you’ve decided that this is the year you’re going to buy a property for investment, congratulations…you’ve chosen a fantastic wealth creation tool.

But what if you’d like to invest, but you’re not sure if you’ve got good enough credit?

While top notch credit can get you the best opportunities, that doesn’t mean your credit “dings and scratches” will keep you from buying a property for investment…it’ll just take a bit more effort to find the right opportunity for you.

Information lenders get from your credit report

  • Your credit score
    • A number anywhere from 0 to 1200; zero is the worst credit, 1200 is the best.
  • Any defaults or bad credit notations
  • Your current address, employment and income information.
  • Finance application information
    • Who you applied for a loan with
    • When you applied for a loan
  • How much credit you’ve applied for
  • The number of credit applications you’ve made

 

How lenders use your credit to determine whether or not they’ll lend to you

Lenders differ in how they use the information they get from your credit report, however the following factors may play a role in their decisions.:

  • Profiling of LVR groups who are in arrears due to economic factors such as a plant closing down where a large number of employees had loans they could no longer pay.
  • Lending risk by industry (e.g. mining in an area where it’s the single largest employer)
  • Risk exposure by postcode or region
  • Your previous account history with the lender you’re applying to
  • Your previous account history with all lenders in the same group umbrella (e.g. St. George Bank, Bank SA, Westpac, etc)

How poor credit can impact your loan

Speak with an experienced mortgage broker to find out your best option when buying a property for investment, as not all lenders will extend finance to someone with poor credit.

  • You may need to put down a larger deposit
  • You’ll likely pay a higher interest rate and fees

Don’t let problems with your credit stand in the way of your financial future. Lenders can vary greatly in how they determine eligibility so speak with a savvy mortgage broker to discuss your personal situation.

If you need help or want more information about your Property Investment strategy, book a FREE consultation with one of our expert Investment Coaches to discuss your situation and investing goals.

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