Understanding of the 4c’s of Credit!!
As I talk to home owners or home buyers throughout Australia on a daily basis, there continues to be a frustration that exists in regards to obtaining a loan.
“Why is it so hard to get a bank to lend to me?”
Others comment, “A bank will only lend me money when I don’t need it!”
or we hear, “decision depends on what kind of mood they’re in.”
If you have ever had similar thoughts, you are not alone.
There are many reasons that a bank will decide to either approve or decline a home loan application.
Now, whilst the whole finance market has changed radically over the years, the fundamentals of how a lender will assess an application hasn’t.
Understanding these fundamentals (and ensuring you have these areas in order) will help you prepare for a home loan.
I will go through them one-by-one this week.
- Credit History
Bank’s credit assessor will also look carefully at your repayment history.
The analyst will access your credit file (with the past 5 years of credit history) and look at both the lenders and the frequency of enquiry on your file for evidence of who you borrowed money from, and how responsible you have been in meeting repayments.
If there is anything in your credit file that looks less than rosy it’s very important to explain this to me. This way I can paint your history to the credit analyst in the most positive light, and mitigate the impact of any shortcomings in your file. For example: if your credit file shows that you were late with your credit card repayments for three months running, and this was due to illness or loss of your job, I can explain this to the Bank’s credit analyst.
The general rule is the higher a borrower’s credit scores, the better their chances are to receive an approval.
Next blog i will cover Collateral (Security)