SBS Filipino

How will my credit report affect my chances of securing a home loan?

SBS Filipino

'For sale' signs are seen outside an apartment block in Canberra.

How does your credit report affect your chances of securing a home loan? Source: AAP


Published 29 June 2021 at 11:58am
By Cristina Lazo, Nikki Alfonso-Gregorio, Edinel Magtibay
Source: SBS

Your salary and savings are enough to secure a home loan - or so you think. Finance broker Maria Papa shares why you shouldn't disregard your credit report when hoping to secure a loan with the bank.


Published 29 June 2021 at 11:58am
By Cristina Lazo, Nikki Alfonso-Gregorio, Edinel Magtibay
Source: SBS


Highlights
  • There are three credit scoring bodies in Australia.
  • Your credit score is included in your credit report.
  • You can request to remove late payments in report due to compassionate reasons.
'May PERAan' is SBS Filipino's podcast series featuring financial experts seeking to answer the most common questions about money and finances.

"Even if you have the best income and you have a lot of savings, there's still that fear of getting [rejected] for a home loan," finance broker Maria Papa shares.

She shares that one thing potential home buyers tend to overlook is their credit report.

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Maria shares the following points you need to remember when it comes to your credit report:

1. There are three credit reporting bodies in Australia.

These are namely Ilion, Experian and Equifax. You can request for your free credit report from any of the three.

"They keep tabs on your credit history - if you take out a personal loan, credit card, apply for utilities...those become historical entries. Every time you ask a bank for a loan, that is a credit enquiry and will be included in your report.

"If your credit report has 20 enquiries in five years - that's too much movement."

2. Your credit score is included in your credit report.

Your credit score is a reflection of what's contained in your credit report.

"When you're late in paying your utilities or credit card. that's reflected in your score [between 0-1000 or 0-1200]. You get a number '1' when you're late for 29 days, a '2' when you're late for 59 days. Every time there's a late payment, your credit score goes down. The bank will see that on your report."

According to Maria, the big 4 banks [Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank] are very particular when it comes to your credit report.

A credit score of 0-600 is bad, 600-800 is average and above 800 is deemed very good.

"You're more likely to get a loan if you're between average to very good," Maria shares. 

3. You can request to remove late payments in report due to compassionate reasons.

"There might be a very good reason for late payments," Maria shares, adding, "Especially if you've been laid off or furloughed due to the pandemic. If this is the case, you can request to have your bank remove late payments from your report due to compassionate reasons."

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Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.

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